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Founder Stories
The Twisted Road to Twisted Road
Liz Melton / about 2 months

The Twisted Road to Twisted Road

By: Austin Rothbard [https://www.linkedin.com/in/austinrothbard], CEO of Twisted Road [https://www.twistedroad.com/ref/TWISTED] It was 7PM on Monday, January 2nd, 2017 when the phone rang. My family had just gotten back from a holiday vacation and we were preparing to return to work and school. The kids were running around, and my wife was making mac and cheese for dinner. I answered the call. It was Melissa, my CFO: “You’re getting fired tomorrow.” Happy new year. I had always wanted to start my own business, and had a few ideas ready to go. Until now, there was never really a catalyst to get me to risk it all. However, I was still uncertain. With 25 years of corporate America experience - 10 of which were running large businesses - finding another corporate gig was always an option. I was at a crossroads. Do I stay the reliable course, with good pay and less risk, or do I sacrifice the comfort of a steady paycheck for the potential of more happiness? They say that the three most addictive things in this world are carbs, heroin, and a steady paycheck. It was time to seriously consider weaning myself from my addiction. Fortunately, I had the tools needed to start my own business: a good idea, experience, and a little bit of startup capital. The idea was simple: create a place where motorcycle riders could rent other’s bikes. Basically, we were going to do for motorcycles what AirBnb did for homes. As someone with experience running pre-established companies with between $20-500M in annual revenues, I never had to start a company with $0. I had a lot to learn. I dove right in. I watched “How to Start a Startup” on youtube, 20 lectures from a Stanford entrepreneurship class. I listened to the “How I Built It” podcast, and read blog posts by Paul Graham, and on Y Combinator. I read “Venture Deals” by Brad Feld, “Slicing Pie” by Mike Moyer, and “Getting Real” by the folks at Basecamp. But watching, listening, and reading wasn’t enough. I needed to meet with people. I sat at my son's computer in the kids' playroom and got to work. I quickly made lists of people with expertise in my gap areas: 1. Startups 2. Tech 3. Insurance 4. Funding Initial meetings led to new connections and more conversations, and as weeks went on, I became proficient in areas where I previously knew nothing. I started calling technology “tech” instead of “IT”. I learned what an API was. And the front-end. And the backend. Every step was challenging and took much longer than I thought it would. It was impossible to find a technical cofounder, and very difficult to find a tech agency I could afford. Insurance for my company wasn’t available, and insurance companies never wanted to prepare a quote for our business. We were too small and the insurance risk was unknown. All of the information I heard about raising capital was contradictory. “Don’t take outside money until you’ve exhausted all your own resources,” and “only build a company using someone else’s money.” “You need VC backing to grow fast,” and “don’t ever take VC funding.” “The first round should be with a SAFE,” and “don’t use a SAFE—they’re not as advantageous as they first seem.” “It’s easier to raise money when you’re pre-revenue,” and “make sure you’ve got some sales before raising.” My frustration escalated. After six months, I found a tech company to build our MVP, and I finally was able to secure general liability insurance three months later, for the low cost of $100K. This policy didn’t cover any motorcycle damage, or any rider/owner liability. This only covered my family if the company was sued. But it was enough to get started. I bought the insurance, hired the agency, and persevered. My funding strategy evolved, and aligned with my values. Self-fund as long as I can. Generate revenue. Grow the company. Keep costs low. Prove the model. Only take angel money, and use priced rounds instead of loans. For two years, I did everything. From opening up a business bank account to learning how to use Mailchimp for our email campaigns. I conducted and administered consumer surveys, made business cards, and exhibited at trade shows. When we went live in October, 2017, I communicated with riders and owners, handled claims, and responded to every customer service request. I worked 14 hours a day, seven days a week. For two years. The most important thing I learned during this time was how to handle my stress and anxiety. Unlike inexperienced founders, running a business wasn’t stressful to me; neither was building a team and delegating. I had 25 years of experience in creating strategies, hiring teams, and growing companies. My anxiety came with the constant uncertainty. I remember that after we had been live for three months, our revenue was only $500 a month, and 60% of this was being paid to our motorcycle owners. I asked my wife “how will I know whether growth will continue or whether this is as busy as we will get? I’m working my ass off, and if we don’t grow, I could be wasting my time.” Her response was simple. “Welcome to being an entrepreneur. Every single business owner before you has sat at the dining room table at night asking themselves the same question.” I started meditating, exercising, and doing yoga—and then began to document my anxieties. Whenever I felt overwhelmed, I’d prepare a simple spreadsheet with four columns. 1. The stressor 2. Why it’s stressful 3. What I can do about it 4. Why this is hard Each column served a purpose; this tool helped me think about how to resolve issues rather than just fixating on the problem. It helped me identify why solving the issue was going to be difficult and will take time. If it was easy it wouldn’t be a stressor, right? But most importantly, it got my thoughts out of my head and onto paper. I found that once I completed the document, I never referred to it again, but immediately felt better. Somehow, this process was therapeutic and cleansing. I now look back on these notes with fondness. When my stress was high, I was adding items monthly (Q2 of 2018 was especially stressful!). But in times of low stress, there were big gaps. There was a six month stretch in 2021 without a single entry. Also, it’s very interesting to review old entries to see what bothered me in prior years. Some of these items still cause some stress, like cash flow, whereas other items, like deciding on the tech stack, now seem laughable. In Q1 of 2019, I raised my first round of outside funding: $615K from 12 angel investors. We used this money to hire a small team and invest in advertising. We scrapped the MVP and decided to build our own platform. We found an insurance partner who would structure the risk the way we wanted. We were on our way. It's been three years, and the growth hasn't slowed. Austin Rothbard - CEO and Founder of Twisted RoadAustin is the CEO and Founder of Twisted Road, a motorcycle-sharing community that gives riders the chance to try new bikes, explore the open road when traveling, or earn money when not using their bikes.
Founder Stories
How My Poppy’s Love of Sports Inspired LeagueApps
Liz Melton / 2 months

How My Poppy’s Love of Sports Inspired LeagueApps

By: Brian Litvack [https://www.linkedin.com/in/brianlitvack/], CEO and Co-Founder, LeagueApps Do you remember the Friends episode [https://www.youtube.com/watch?v=8w3wmQAMoxQ] with the “pivot” scene? Ross, Chandler, and Rachel are attempting to move a couch up a flight of stairs and Ross yelling out, “Turn!” didn’t work so he switched to “Pivot!” over and over and over again. Moving furniture has never been the same—and neither has the startup world where it seems like every entrepreneur has had to pivot. Myself included. I certainly didn’t set out to pivot our business; it happened along the way because of a need that arose from the industry. Allow me to start from the beginning. The story starts with an orphaned five-year-old boy named Saul who immigrated to America at the start of the 20th century. He rode the waves of the Eastern European migration right up to the shores of Ellis Island and eventually landed in Peabody, Massachusetts in the care of relatives from the “old country.” Saul was small in stature, with fiery red hair and an even more fiery personality. He quickly learned how to get by on the streets and assimilated into his new world through sports, which allowed him to prove that he belonged. Saul played games such as stickball, stoopball, slapball, and “kick the can” with other kids in the neighborhood. He jumped rope and double dutch. New derivatives of sports (especially baseball) turned into street games depending on whatever equipment and street space could be secured. Kids were left unsupervised and they organized on their own. They competed. They had fun. Because of his childhood sports experience, he was a lifelong fan, eventually becoming one of the Dodgers’ biggest fans. Perhaps the most important role sports played in his life was as a way to connect and enjoy the time spent with his three children, including his eldest son and my dad, Howard, and his six grandchildren. And then I came along and inherited the love of sports, too I played as often as I could as a kid, both recreationally and for school teams. I had a job throughout high school working for the local Police Athletic League progressing from a referee all the way into an administrative role. I was a sports organizer. In that role, I learned how much sports matter within local communities. I even wrote my college admissions essay about my experiences in organizing youth sports. I also realized how irrational and immature many adults acted when it came to their kids’ games. Little did I know that I would go on to start and build a company that would address that issue—and more—in youth sports. It wasn’t until well after college that I rediscovered sports when I joined recreational softball and basketball leagues in New York City in my mid-20s. In fact, one of the reasons I joined the founding team at Sportsvite (which later became LeagueApps) was to try to solve my own problem of making sports easier and more accessible for adults. Here comes the pivot. After running Sportsvite with my co-founder, Steve Parker, for four years, we realized that adult recreational sports were challenging to scale to the level that an advertiser would find compelling enough to want to spend lots of money to reach that community. As we dug into the data, we discovered that many of the community super-users were sports organizers—and they were focused on kids. We struggled internally with what to do. We knew that this evolution meant starting over—and we had years of hard work under our belt. Doing that took a lot of soul searching. At the same time, we wanted to be sure our mission stayed the same: to impact and influence how people play sports. We brought in a new teammate, the energetic and optimistic Jeremy Goldberg, and launched LeagueApps [https://leagueapps.com/] in 2010 with the same mission and a better idea of our audience. Once we released the initial product, we knew we were on to something and could sense the product and market fit. We didn’t even realize at the time that we were building a vertical SaaS business, we just knew that sports organizations were willing to pay for the value they derived from the LeagueApps functionality. Twelve years later, we’re 125 teammates who are distributed across the country, many of whom played youth sports, college sports, professional sports, and even a Gold Medalist Olympian [https://leagueapps.com/about/our-team/]. We work with many thousands of youth sports organizers and the major professional sports leagues on their initiatives. We are lucky to have Major League Baseball as an investor teammate and so are the ownership groups of the LA Dodgers and San Antonio Spurs. We have an athlete investor group that includes the likes of Paul Rabil, Julie Foudy, Shane Battier, David Robinson, and Dhani Jones. One of our proudest achievements has been in the launch of FundPlay [https://leagueapps.com/about/fundplay/], the mission-driven arm of our platform. In 2019, we pledged 1% of our revenue to sports-based youth organizations that provide a safe place for kids in underserved communities to play sports. Deriving from our mission to impact and influence how people play sports, we want to be able to provide the opportunity for all kids to play sports. We’ve impacted nearly 300,000 kids, granted more than 110 software licenses, and provided more than 200 cash grants. Earlier this year, we raised nearly $150,000 during our FundPlay Drive fundraiser to help a Fundplay partner build a soccer field in the Bronx. It’s a long way from Saul and the fiery personality he brought to every sport he played in the streets with his friends—and at the same time as close as one can get to keep his legacy alive for generations to come. About Brian Brian LitvackBrian leads the LeagueApps team and works closely with sales, partner success, product, and technology. He is also a member of the Board of Directors. Most importantly, he orders pizza and trophies to mark company milestones. Previously, Brian was part of the founding team at Sportsvite and held various business development roles at CBS Sports, College Sports Television, and the Official College Sports Network. Brian graduated from the University of Michigan. Go Blue!
Growth
7 Tips for Introducing a New Revenue Channel
Liz Melton / 4 months

7 Tips for Introducing a New Revenue Channel

If I’ve learned anything about working in SaaS, it’s that creating a new revenue stream [https://www.forbes.com/sites/theyec/2020/05/19/10-creative-ways-to-find-new-revenue-streams-for-your-business/?sh=492f81847d92] is like hitting the jackpot. So long as a channel makes more money than it costs to operate, people will get excited about it. And so many companies have taken this approach, acquiring startups, building new products, and even licensing some of their features to add more branches to their money tree. But one revenue channel has become particularly fashionable in tech: partnerships. I recently launched a new partnerships-related revenue channel, so I figured I’d share some lessons learned. Although these tips are more specific to partner portals, they are still a valuable review for anyone about to set a new revenue channel in motion. But first, I’ll dive into why you would want to introduce a new revenue channel and what typical partnership revenue channels look like. Why introduce a new revenue channel? You can probably guess that the biggest rationale for introducing a new revenue channel is to increase revenue. While that’s true, companies can also benefit from increased brand awareness and legitimacy. Not only does this expand your TAM [https://www.pipedrive.com/en/blog/channel-sales], it also boosts revenue diversification, improving your financial stability [https://www.headway.io/blog/5-strategies-to-find-new-revenue-streams-for-your-business] . And with more people knowing about and buying your products, it puts you in an excellent spot to sell your business or raise higher rounds. Plus, new revenue channels force change internally. Finance teams have to review pricing strategies [https://www.freshbooks.com/hub/startup/increase-revenue] more often to make the new revenue channel sustainable. Analytics teams will have to collect and interpret the data they’re getting from the new revenue channel. Finally, with potentially extra time on their hands, sales teams will have an opportunity to reevaluate their GTM strategy and play to their strengths. These are all positives if you ask me. The partnerships revenue channel(s) As we’ve discussed before, strategic partnerships [https://boringstartupstuff.com/newsletter/strategic-partnerships-for-startups] have many benefits, but most importantly, in this context, they add revenue. Of course, that doesn’t mean cash comes rolling in the first time you talk to a partner. It takes time and effort to build relationships, educate partners, and gain their trust before they even consider sending you a referral. But with the right hires, you’ll eventually start expanding your partner program faster than a small team can keep up with. So what happens when your revenue channel gets too gnarly to manage? At that point, you need what I would call a “sub” revenue channel, one that’s more automated and streamlined. Partner marketers and partner managers are constantly generating new partner leads and converting those leads into full-on partners. But what about the current partners? How will you keep reminding them to submit deals? At a certain point, it’s unsustainable to have one-on-one meetings with every partner. You need them to be able to self-serve. You need them to generate opportunities for you overnight. In partnerships, this usually equates to a portal, a platform where partners can learn about your use cases, get certified, request co-marketing activity, and register deals. In this way, your partnership engine is continuously running. 7 tips if you’re launching a new revenue channel No matter if you’re launching a partner portal or your own creative new income-generating stream, it’s essential to keep these pointers in mind: 1. Know if it’s feasible with the resources you have This might be a “duh” thing, but really, take a moment to think through the budget and time it’ll take to bring this new channel to life. You’ll need at least one person to own the whole strategy and execution, and you might need some software to get started too, but think broader than that. For example, to implement a partner portal, you’ll need to evaluate, decide on, and then buy a PRM. But beyond that, you’ll need someone to gather requirements for, configure, and test that PRM. You’ll need a Salesforce admin to set up the integration. You’ll want partner manager input on functionality. You’ll need someone to measure KPIs and fix maintenance issues. If you end up creating courses or other learning materials, you’ll likely need assistance from product marketing or even engineering. Plus, you’ll want marketing teams to help you publicize the portal (this might cost money). As you can see, there are a lot of moving pieces, even for what is more of a “sub” revenue channel. 2. Design with your audience(s) in mind To get your revenue channel to rake in the dough, you need to make it as easy as possible to do so. If you’ve ever been a fan of flywheel methodology, you know about “reducing friction.” Essentially, this boils down to removing as many obstacles as possible for customers trying to buy a product. The same goes for new revenue channels. While someone may not be buying something directly, the concept still applies. If we think about this in terms of a partner portal, this means catering to partner needs. What will they want to get out of the portal? How can you make it as easy as possible to: * Register deals * Learn about what your company does * Find marketing materials * Understand the requirements and benefits of moving up in tier Drilling down deeper, you want to provide a fantastic user experience. Take the first bullet, for instance. You don’t want it to take 20 steps to register a deal. Instead, you want to obtain the minimum information a partner manager and sales director need to schedule a meeting. Put some thought into this before you get started because it will literally pay off in the long run. 3. Explain how to use it This might sound silly after you’ve already thought about number 2. But even if you have the most intuitive new channel, people will still want a way to get their bearings. If they are an existing customer, what will happen to their contract if they buy your new product? If a partner logs into your partner portal how will they know what to do? There are multiple ways to solve for these issues. After all, PLG companies have been leading the way in the realm of self-serve for years. So take a page out of their book. Create guides, FAQ pages, communities, instructional videos, or welcome sequence emails to quickly get people up to speed. For our partner portal, we created a video that appears first-thing on the homepage explaining what various modules do and how partners should use them. We also uploaded this video and the corresponding slides to the library for reference later. Hint: give people a call to action. At the end of your instructions, make sure to give people something to do as a first step. This will turn out to be a good way to measure engagement later. 4. Don’t forget about nuts and bolts If you’re the one in charge of putting a new revenue channel into practice, at some points you’ll probably lose the forest for the trees. On any high-stakes project, it’s easy to get caught up in the details. You have to hit a certain deadline, and you’re doing whatever it takes to get there. Unfortunately, that makes it really easy to forget about what will happen once it goes live. So leave some time to think about: * Process - What happens when new sales or potential come in? Who will approve or reject them? How will they get assigned to a partner manager? What, if any, interaction will they have with partner managers? Who is responsible for answering support questions? All these questions should be at least relatively ironed out before your launch, else you’ll have a mess to deal with when it’s in production. * Legal - Will customers or partners have to sign agreements? What if they make redlines? Think about how and when you’ll need to interact with your GC and how to limit the time it takes to get these documents signed. * Incentives - What will make people want to keep using this channel [https://blog.hubspot.com/sales/channel-sales]? If you’re building a partner portal, consider adding partner tiers with enticing benefits or sending swag boxes to partners who have registered x number of deals. * Pricing adjustments - Not as applicable to a partner portal, but if you’re introducing a new feature or product, you’ll likely have to make (and then communicate) changes to your pricing structure. * Unexpected challenges - For us, we didn’t realize that LinkedIn doesn’t have a badging system for licenses and certifications until the last minute. To launch the certifications portion of the portal, we had to find and pay for a whole separate credentialing vendor. 5. Do a beta launch If there’s a way to do a soft launch, I highly suggest it. First, it will expose your bugs. When you’re looking at something long enough, your eyes miss a lot. Second, it will show you who your most loyal customers and partners are. The people who give you good feedback now will probably be good candidates to bounce ideas off of later. Third, a beta launch helps you determine what KPIs you can and should track. This will also help you set clearer, more reasonable targets for your go-live. And honestly, a beta launch gets people hyped and makes them feel like one of the lucky chosen ones who get to participate. 6. Have your marketing plan ready Although sometimes revenue channels can go viral (think about D2C companies who partner with a really famous influencer affiliate), most of the time, it won’t market itself. You need to put in at least some work to make sure (1) people know about your new program, and (2) they actually go use it or buy from it. So, how do you do that? Well, first, figure out where these new customers [https://www.inc.com/guides/find-new-customers.html] or partners hang out. What social channels are they on? Maybe they listen to a certain set of industry podcasts. Perhaps there’s a professional community where you can place an ad. More generally, you could write announcement blog posts, a press release, or even hosting a webinar about this new channel (or all three). Think also about what’s already in the marketing pipeline. Does your company have a popular newsletter? Can you vie for a special section? Make a note of other big announcements coming down the pike and try to schedule your release around that. You don’t want any current marketing to overshadow it. Lastly, set an engagement strategy. Get creative about getting customers or partners back to your platform, whether it’s with incentives or FOMO. 7. Continue asking for feedback The cool part about revenue channels is that they aren’t a one-and-done thing. You have the chance to improve them as time goes on. And who is best primed to give you constructive criticism? Your partners and customers. So ask them for it! Send short, periodic satisfaction surveys with questions that will give you tangible feedback to work from. Think of other ways to weave this in, too. For example, we asked partner managers to bring up the portal in meetings to get partners’ take on it. If you’re not getting enough responses, try tacking on a gift card to sweeten the deal.
Growth
So You Want to Be a Founder?
Daniel Jakaitis / 4 months

So You Want to Be a Founder?

I have spoken to many founders about what it is like starting a company. When listening to founders talk about their early days, they give off a romantic sense of fearlessness, coupled with a clear sense of direction, followed ultimately by success (this is what we call selection bias [https://en.wikipedia.org/wiki/Selection_bias]). Even when they inevitably launch into anecdotes about late nights, server outages, and customer horror stories, it never seems like they questioned whether each obstacle was the correct one to be addressed at that point in time. But in my experience, this isn’t even close to being true. Now, two months into my own founder journey, I’m learning that these David-vs-Goliath stories skip over the daily process of re-evaluating what is important, the sure-things washed away with a single email, the sheer amount of luck involved in starting a company, the amazing (and not so amazing) people willing to help, and the constant state of not knowing which direction the finish line is in – or if there even is one. I am not (yet) a successful founder, so take what I say with a grain of salt. However, there are a few lessons I stumbled upon that I want to share: Two things happen the moment you quit your day job to go full time on your founder journey: 1. Your LinkedIn inbox gets flooded with spam from every service provider you could imagine (no, I do not have time this week to hop on a quick intro call) and, 2. The sudden waterfall of to-dos starts pouring over your head. While I can’t help you avoid the LinkedIn spam, I found a few mental models and practices to deal with number 2 so you can avoid feeling like Sisyphus. * Sit and think as often as possible - Preferably in a quiet place without a toddler. Eventually, you won’t have time during your day to let your mind wander about ideas. So make space for this type of thinking, as it is likely what got you to this point in the first place. * Product reflection - Keep asking why people will care. Don’t buy into your own marketing or sales pitch as the truth. Every time you pitch your product, evaluate your listeners' reactions. Are they falling asleep as you start speaking, or do their eyes light up as you lay out your idea? * Self-reflection - Keep asking what your weaknesses are and keep looking for bottlenecks in your team's process. Find where you are the limiting factor and correct the issue. This usually involves abdicating work to another team member. * Timebox everything - Otherwise, you don’t get the right things done. Each week, I sit down and block out deep work periods to tackle the 2-3 largest items. Ironically, the 2-3 most pressing items change every single day, so adjust accordingly. * Ask for help on all things out of your expertise – This ties into self-reflection but goes a step further to seek outward help where necessary. For me, this was bookkeeping and marketing. There are other things I am not great at, but these two were obvious for me to start. * Listen selectively – Many people will start offering advice to you simply because you have the title “Founder” in your LinkedIn profile. Listen to them, ask them about their experiences, but be mindful of the context. * Sourcing candidates is harder than ever - And I’m saying this as the founder of a hiring and recruiting tech company! Get your messaging right. People want to know who is soliciting them and why they should care. Keep asking yourself why people will care about what you are doing – and be mindful that most people won’t care initially. * Most importantly, put trust in your first hires. But don’t do this blindly, or you will set them up for failure. Ensure you have given them the tools to run with things and execute. Lastly, here are a few things I am still trying to remind myself to do as I move deeper into my founder journey: * Constantly ask whether I’ve got the right data - Simple things like Google Analytics, Stripe events, click events in your app, etc. are necessary to make the right decisions. Data-oriented decisions are the key to success; incorrectly capturing data and making subsequent poor decisions lead to failure. Set your metric north stars [https://www.insightpartners.com/blog/measuring-your-product-led-growth-strategy/] – monitor and re-evaluate periodically to make sure you are still aiming in the right direction. * Talk to people constantly - Practice your elevator pitch (drop the stealth-mode nonsense). Get in reps by bringing it up in normal daily conversations. Seek brevity and precision. In two months Chatkick’s [https://chatkick.com/?utm_source=boringstartupstuff] elevator pitch has gone from: > “Chatkick helps teams scale their interview process by letting teams to record, transcribe, and analyze their candidate screenings. With an interactive video interview platform, hiring managers can be sure every candidate screening is being done consistently. Chatkick offers distributed teams a way to asynchronously review and collaborate on candidate feedback.” To: > “Interview management for distributed teams.” It is not that founder stories fail to mention all of these things, it is that these things tend to appear in everyone’s narrative in slightly different ways. While the first few weeks and months of a startup are exhausting, it is always a good reminder that Rome wasn’t built in a day...although I am damn sure they were laying bricks every single day.
Growth
Strategic Pricing for SaaS Startups
Liz Melton / 4 months

Strategic Pricing for SaaS Startups

Pricing for a SaaS business is hard. Really hard. No matter what stage your company is at, pricing will always be a challenge. That’s because it’s part mental game, part math game, part trial and error. The key to growing revenue responsibly is to keep iterating. Think about a SaaS product you’ve used for years一it probably wouldn’t be around today if they hadn’t switched up their pricing from time to time (as annoying as it might’ve been as a customer). In each of those instances, that company came up with a new pricing strategy by weighing new features against COGS, against customer satisfaction and perception, against inflation, against their competition. Despite the fact that pricing is a bit of a moving goalpost, we hope to provide a consistent, solid framework for how to think about pricing at an early-stage company. Structural aspects of pricing to consider Pricing is about a whole lot more than nailing down an amount someone will pay for something. You have to think about pricing holistically, from a product, value, timing, volume, and gross margins perspective. Here are a few questions you’ll need to ask yourself when you’re thinking about pricing for the first time or reassess your current structure: * Will you have annual or monthly contracts? Monthly contracts might be more appealing for customers with tighter budgets that aren’t sure if they like your product yet. On the other hand, annual contracts give you more peace of mind with cash upfront and the security of a year-long commitment [https://www.priceintelligently.com/blog/bid/194370/boosting-mrr-annual-vs-monthly-subscriptions-in-your-saas-pricing-strategy] . Find out whether there are accounting or volume-related advantages to each. You might end up offering both annual and monthly contracts, giving people a price break if they pick the longer-term option. Whichever way you go, just make sure you have an auto-renew feature. * Will you charge based on value or gross margins? Cost-plus pricing isn’t super advantageous to SaaS companies that don’t offer a physical product and may not yet have product-market fit. That said, it probably would end up making your product cheaper, helping you get an edge over the competition when you’re just starting out. * Will your contracts be a flat fee, priced on consumption, or both? Right now, consumption-based pricing is on the up and up. According to OpenView Ventures, 45% of expansion stage SaaS companies [https://openviewpartners.com/blog/usage-based-pricing-playbook-2/] have a usage-based pricing model. But remember, flat fees and consumption-based pricing don’t have to be mutually exclusive. For example, you might charge a flat fee to demonstrate the value of using your platform and then tack on extra fees for overages. A very common practice is turning this combo into a 3-part tiered structure [https://www.cobloom.com/blog/saas-pricing-models]. This strategy often leads to greater contract values but can be tricky to keep track of as you scale. If you go this route, make sure you have a plan in place for collecting overage data. * Would dynamic pricing make sense for your product? Are there certain times of the year where the demand for your product skyrockets? Dynamic pricing [https://blog.hubspot.com/sales/pricing-strategy] may not be as applicable to SaaS companies, but it’s worth considering if it applies to you. You might as well capitalize on drastic shifts in demand. * Can you get more customers in the door with a freemium strategy? If your company is in a crowded space, and you want to get a leg up on customer acquisition, freemium might be for you [https://boringstartupstuff.com/newsletter/when-to-use-freemium-pricing]. Freemium is a smart choice if you have a low marketing budget and low COGS. Freemium allows users to try before buying, so if they have a fantastic experience and know that even more great features are behind a paywall, you’ll likely have yourself a loyal customer. Five tenets of pricing Leading VCs have published a lot of articles and ebooks on pricing. After reviewing several, we found several tenets come up over and over again. So let’s dive into what each of these five principles means before providing a real-life example of how each element works in practice. For this exercise, we asked how the founder of a growing SaaS startup in the HR space applied each of these doctrines to his pricing strategy. 1. Pricing will always be a WIP It’s worth belaboring this point: pricing is never “done.” As Bessemer Ventures says [https://www.bvp.com/atlas/the-four-ironclad-laws-of-b2b-saas-pricing-that-can-boost-your-revenue-up-to-32] , “too many companies treat pricing as a point-in-time exercise,” which seems foolish, given that the market is always changing, new competitors emerge, and customers’ budgets evolve. Not to mention, your company goals change, too. So revisiting pricing regularly一twice a year or more一is a practice you should adopt right away. It gets you in the iterative state of mind and makes you pay closer attention to the way customers’ needs and willingness to pay have transformed. Real-life example “I recently purchased another smaller SaaS company to merge with my current startup. Prior to the acquisition, the original founder modified pricing several hundred times. While he got some users in the door (60), he was bending over backward for it. And only 4 or 5 of those customers were on annual plans, so it was really hard for him to profit from the ridiculously low prices customers were favoring. So the first thing I did was change it up. I instituted a freemium model because I wanted that steady stream of new prospects to demonstrate our value. And I elevated the base price slightly to show that we still provided the same quality as others in the space but were still 50% of the annualized cost per user of the next-best competitor. Based on the experience of the previous owner, I know that won’t be sustainable forever though. I don’t know how this new product will fit into our value prop and what customers’ willingness to pay for it is, so I’ve introduced a new policy of revisiting our pricing quarterly.” 2. Use the data you have When you’re creating a pricing structure, the logical thing to do is to look at your competitors’. But what if you don’t have any competition yet? Startups are pioneering new industries, making it extremely difficult to know where to start. In fact, roughly 1 in 5 SaaS companies admit that they set their pricing by guessing [https://get.fuelbymckinsey.com/article/the-6-rules-of-setting-price-for-saas-offerings/] what the right price might be. Often, this makes for a great excuse to put off pricing discussions. Don’t fall into that trap. Even if no companies are doing exactly what you’re doing, there will definitely be benchmarks in other spheres. Study companies in a tangential space that serve a similar customer base. Or, if your product will be one of many in an enterprise’s tech stack, figure out how much the other products cost relative to yours. Take the time to do your research. Real-life example “There aren’t a ton of direct competitors, but that doesn’t mean I haven’t tried to find relevant data. I’ve looked at the pricing structures of employee recognition and rewards software, employee engagement platforms, recruiting AI companies, and even applicant tracking systems. They are all serving the same customer base we want to penetrate so looking at how they price was really helpful. Just like those companies, we wanted to offer a clean entry-level price, structured in a way so that teams could find an extreme amount of value without feeling like they were ripped off.” 3. Pay attention to feedback When you’re small, everyone on your team is collecting feedback about pricing一from the customer-facing people to the product people. And customer feedback matters [https://sixteenventures.com/saas-pricing-strategy]. After all, they’re the ones who are going to be refusing to buy your product or evangelizing it. If you’re the founder, people might feel more comfortable giving you their candid opinions, so use customer interviews to your advantage. Next, establish a way of collating and talking about all this input and how it can translate to changes in your pricing framework. This could be a monthly meeting, a working google doc, or part of your offsites. Designate a point person to organize the feedback and schedule time to keep pricing conversations going to prevent this dialogue from getting lost in the shuffle. Real-life example “Talking to customers and figuring out how they're using the product was huge for us. We realized there was an issue with per-user pricing: some users get way more value from our products than others. This is because recruiters use “aliasing” where they do their work on behalf of hiring managers. So, even if just a few recruiters were using our tool, they had to buy multiple seats. And the hiring managers who were being aliased really didn’t use the tool at all. So that’s when we decided to totally scrap per-user licensing.” 4. Packaging matters Not all people are bargain buyers一they can be swayed by performance, packaging, and other perks. Think about what else you can offer, like a loyalty or referral program, outstanding customer service, specific product features, or access to a certain network of industry leaders. Also keep in mind that not all customers have the same objectives nor the same budgets. Segment your customers into personas [https://www.priceintelligently.com/hubfs/Price-Intelligently-SaaS-Pricing-Strategy.pdf] to pinpoint their buying power, top use cases, and perceived value more accurately. Then, incorporate these differences into your pricing model to give customers more flexibility. A classic example of this is offering a software package with enterprise, small business, and personal editions [https://www.pwc.com/mt/en/publications/assets/pwc-the-future-of-software-pricing-excellence-saas-pricing.pdf] . As you do more research, you might brainstorm ways to bundle your products in a way that encourages upsells or create more compelling offers and discounts. Real-life example “Because of the aliasing problem, we completely shifted our pricing strategy. Instead of a per-user pricing model, we came up with three unique tiers based on our customer segments. Our base plan has 3 seats at $99. This is an affordable price for some of the mid-market companies we’ve been targeting. The next level up has unlimited seats, but has a cap on the messages recruiters can send. It’s a flat $399 platform fee plus volume buckets starting at $5 per month. The enterprise model (the highest tier) also has unlimited seats but has to talk to sales to negotiate a deal for the volume piece of the puzzle. Based on how this goes, we’ll also be thinking about the integrations we offer (custom vs. basic) and other ways to switch up our pricing based on features coming down the pike.” 5. Measure your success You won’t know if the pricing and packaging you’ve decided on are working unless you measure it. But like everything in pricing, measurement is a bit nebulous. Try setting KPIs based on customer pushback [https://medium.com/swlh/5-signs-your-prices-are-too-low-7e8bb218a322] and the number of inquiries, leads, and conversions you get from different versions of your pricing page, email campaigns, and sales scripts. Use A/B tests to gauge customer behavior [https://www.pragmaticinstitute.com/resources/articles/product/how-to-price-saas-products/] and continue refining until you see patterns in each customer segment. Of course, keep the bigger picture in mind. One pricing strategy might get really good reception and seem like a wonderful idea until you realize you’re actually losing money. Real-life example “My rule of thumb is that if you generate 50 inbound leads and 45 of them convert on the pricing published on your website一no questions asked一your pricing is too low. If people are inputting their credit card information with no hesitation at all, you’ve way undershot. It’s time to increase your prices. Keep track of what people are responding to and what they’re not and continue trial and error-ing until you get the response you want. At the same time, keep your unit economics in mind. I once read that your Annual Contract Value (ACV) divided by your Customer Acquisition Cost (CAC) should be greater than 1 [https://get.fuelbymckinsey.com/article/the-6-rules-of-setting-price-for-saas-offerings/] (ACV/CAC > 1).” Conclusion Pricing is a delicate balance with so many variables. And it’s even tougher for small startups that don’t have much data to go on nor resources to execute. But, of course, that doesn’t mean you should just give up. Instead, you should think about pricing as an ever-evolving project bearing these five tenets in mind.
How to
Early Stage Recruiting
Daniel Jakaitis / 4 months

Early Stage Recruiting

Today’s hiring climate is uniquely hard for young startups. Incumbent growth companies raising massive amounts of money [https://www.economist.com/business/2020/12/09/companies-have-raised-more-capital-in-2020-than-ever-before] , record low labor participation [https://www.bls.gov/charts/employment-situation/civilian-labor-force-participation-rate.htm] , digital burnout [https://www.cnbc.com/2020/07/28/remote-work-burnout-is-growing-as-coronavirus-pandemic-stretches-on.html] , and more are contributing to an obstacle course of hurdles when sourcing talent. Crafting the right outreach can make all the difference. Personalized cold messaging [https://trinsly.com] combined with a concise process can be the secret weapon for a startup in the face of current hiring challenges. Let’s take a quick look at what strong candidate outreach looks like. Messaging Prospects For new founders, writing cold emails can be a little scary. Here are a few pointers to structure clear, powerful candidate outreach campaigns: * Use (personal) email, not LinkedIn messages - While email has it’s challenges, LinkedIn can be incredibly limiting when attempting to scale a recruiting process. Additionally, many highly skilled candidates do not use or monitor LinkedIn (with the exception of Sales & Marketing candidates). * Subject lines matter - Short and sweet wins the day. Add the candidate's first name for an even better open rate. * Tell them how you found them - Be honest here. It gives them some context as to what you may – or may not – already know about their background. * Spark some curiosity - This could include a wild backstory of how you ended up founding or working at your current startup. Or perhaps it's a few crazy facts about some of your team members. Anything to make them read onward helps! * Establish your credibility - Qualified candidates receive a lot of messages. But most of these messages have no relevant information and are quickly dismissed. Talk about who you are and why working with you would be a great opportunity upfront. Also try throwing in current revenue or customer traction metrics, early fundraising numbers, a sampling of your strong team members, or the idea behind your groundbreaking new product. Even better, ask the prospect about a common connection if you have one! * Make a call to action - Keep your CTA simple. In practice, people are rarely willing to schedule a call immediately. Offer to send over more information on the role, the company, or product. If someone is even the slightest bit curious about the position, they are much more likely to accept a proposition for information than a request for carving out more time. * Money is in the follow-up - As the old sales expression goes, the money is in the follow-up. Don’t let a single unanswered email get you down. Schedule follow-ups with your prospects easily with tools like Trinsly [https://trinsly.com/?utm_source=bss]. * Bonus tip: If you created your email address within the last month, use an email warming service for a few weeks (we like Warmup Inbox [https://www.warmupinbox.com/]) to ensure your messages stay out of the spam folder. Should you use external recruiters? There is no right or wrong answer here. Recruiters may be the answer for niche roles where your network or sourcing capabilities may not have reach. Most recruiters use the same methodologies described above – don’t think there is some secret sauce behind their hefty fees. Of course, if you are time-constrained and have the money to spend, a recruiter can be a godsend. If you choose to go this route, make sure your recruiting team is crystal clear on how to position and deliver the message about the role, company, and founder(s). Some final words on recruiting for startups Make sure you have a process in place before you start prospecting. The worst-case scenario is bringing candidates into a process with no clear ending [https://www.bbc.com/worklife/article/20210727-the-rise-of-never-ending-job-interviews] . Make sure your team knows the core competencies you are hiring for. In other words, have an explicit set of qualities to define the ideal candidate. Competencies are not skills per se, rather they are more qualitative characteristics of a candidate (e.g. empathetic, analytical, resourceful). Know your compensation package ahead of time. This question will arise, so you need to be prepared to answer on the spot. Failure to do so will result in candidates leaving the process or being picked up by competitors. Lastly, move fast. This market is challenging, but as a startup, you have one main advantage: the ability to move fast.
How to
Strategic Partnerships for Startups
Liz Melton / 4 months

Strategic Partnerships for Startups

If you work at a tech startup, you’ve probably read an announcement about a new strategic partnership, been invited to a webinar showcasing a new integration, or been asked to join the partner program of a big player in your industry. It’s getting harder and harder to avoid these emails as the SaaS scene continues to explode with new partnerships and alliances. What’s all the hype about? Strategic partnerships have the power to skyrocket your startup’s growth. Being backed by a leader in your space instantly elevates your credibility and gets your name out there far faster than even the best marketing teams could. And strategic partnerships are good for the other company, too, infusing fresh perspectives and new customers into their product teams and sales funnel. In fact, 57% of companies are using partnerships to acquire new customers [https://breezy.io/blog/strategic-partnership-stats/], and 44% form alliances to get new insights and innovation. As they say, “teamwork makes the dream work.” That is, of course, if everyone’s on the same page. In this piece, we talk about what strategic partnerships are, the advantages they bring to startups, and how partnership teams reap those benefits. What are strategic partnerships? Before we go any further, it’s important to understand what a strategic partnership is. At its core, a strategic partnership is one in which two organizations form a relationship that is mutually beneficial and transformative, based on each company’s strengths [https://medium.com/ceoquest/how-to-form-strategic-partnerships-without-getting-crushed-d28adfe2b664] . For startups, partnering with a market leader can mean greater reach and notoriety. Catching the attention of a household brand, a prominent consulting firm, or a renowned agency can skyrocket your name recognition. For a well-known company, partnering with a startup shows customers and prospects that they are interested in innovating. Working with a startup can add to their current suite of integrations or services that they’ve not had the time, expertise, or resources to build in-house. Beyond that, building a strategic partnership might one day turn into a successful acquisition for both parties. The key is finding the right fit and coming up with a plan to ensure the strategic partnership is worth it to both groups. What are the benefits of strategic partnerships for startups? We’ve touched on a few reasons why startups should consider strategic partnerships, but here are some explicit advantages: * Clout & Marketing - By associating your company with a larger company’s already-established brand can provide priceless legitimacy and trustworthiness among your prospects and customers. This also ties into marketing, shining a long-overdue light on the amazing things your startup is doing, and sending impressions, PR, and engagement through the roof. Over the long term, a strategic partnership validates your value proposition and reinforces your competitiveness in the market. * Sales Network - One of the most compelling reasons to form strong strategic partnerships is because you’ll gain access to their customer base. These days, there are tons of customer and prospect overlap tools (Partnered [https://partnered.com/], Crossbeam [https://www.crossbeam.com/], Reveal [https://reveal.co/]) that surface mutual opportunities for both parties to influence deals. This can be especially helpful if you are in a niche market [https://learn.marsdd.com/article/partnerships-as-a-market-development-strategy-for-startups/] that’s tough to penetrate. Eventually, your strategic partner may even consider becoming a reseller of your product. * Round out your expertise - Startups don’t always have access to the resources they need to take their product and go-to-market efforts to the next level. Partnering with a bigger company can supply connections, technology expertise, project management and business process skills, and sales proficiency that you may not have had access to otherwise. * Product feedback - Your strategic partners will be showing off your product to their customers and prospects, giving you the opportunity to stress-test your product. Because they have a stake in how your startup performs and the value it provides to their customers, they’ll likely offer overall guidance to scale up your product suite [https://review.firstround.com/What-to-Learn-from-This-Restaurant-Startup-That-Turned-Strong-Partnerships-into-a-Better-Product] . Just like customer service representatives or customer success managers would, they’ll pass along feature requests, bugs, or other advice on how to differentiate your product from others they’ve come across in the market. What would someone on a strategic partnerships team do? Before you institute a partnership team (or person), you need to know what their responsibilities and goals should be. Below, we outline several tasks that typically fall under this department’s purview. Research Partnership leaders are always looking for new strategic partners. But knowing where to look isn’t always easy or intuitive. Start by listing out and researching the behemoths in your category. You won’t necessarily become partners with the big guns in the next few years, but getting an understanding of how their partner program works and who they are looking for can help you prep for pitching the smaller ones. Next, ask your customers what tools they use and the service providers they recommend and put them on your list. Then, start adding the names of people at those companies who are in sales or partnership roles. Look for people you know from school, previous jobs, accelerator programs, local businesses, or internships who might work in the space and could make intros for you. Having a big list isn’t a bad thing at the beginning, since you’ll be whittling it down as you decide who to contact. The most important thing you should be looking for are companies with a gap where your product or service would fit perfectly. This gap should be causing enough problems for their go-to-market teams that they’ll want to do something about it. Another point worth mentioning is that you want to approach partners whose purpose and values line up with yours [https://www.startups.com/library/expert-advice/3-steps-you-can-take-to-build-great-strategic-partnerships] . Without that alignment in place, things could go awry quickly. Engage Now comes the fun一and sometimes frustrating一part: contacting the people on your list. Before you do, you need to do a significant amount of stalking. Try to find several people at the company you’re interested in partnering with and find out what they are interested in. Maybe they are publishing articles on Medium outside of work on exactly the topic you’ve noted as a gap. Or maybe they have a mutual customer. Knowing these data points can set you apart and put a unique spin on your cold outreach. You also need an airtight argument for why partnering with your startup makes sense. If it doesn’t sound strategic and straightforward enough to you, it certainly won’t be a no-brainer for the person receiving your email or LinkedIn message. Really emphasize what’s in it for them and don’t forget to play into their motivations around launching a new service line, better serving their customers, making more sales, or simply getting promoted. And remember, if you know someone who knows the person you’re trying to reach, that’s way better. A warm intro is almost always more secure and effective than a cold one. Now is also the time to get creative. Don’t be afraid to sign up for demos, attend webinars and ask questions in the Q&A, leave comments on blog posts, go to industry event networking sessions, ask your customer to mention your name, send relevant articles to your contacts, and more. You’ll get a lot of nos [https://jproco.medium.com/how-startups-secure-valuable-partnerships-934717093838] , but you never know what might be your way in. Plan Once a partner is serious about partnering with you, it’s time to sign some papers. Many companies require you to sign a mutual NDA and a partnership agreement. At this point, you’ll be really excited, but do not skip over the fine print. While it doesn’t always happen, partnership deals can be very lopsided, so make sure you’re getting what you need in the agreement before signing. Of course, many other agreements can be quite lucrative, allowing you to get money from referrals. In tech, this is typically 10% of the total ARR. After everything’s signed, sealed, and delivered, it’s time to plan. Think hard about your short and long-term goals for this partnership [https://www.startupgrind.com/blog/how-to-find-partners-for-your-startup/] and the steps to get there. You don’t need to come up with a 10-year plan this minute (in fact, shorter is probably better at first), but having these outcomes in mind is essential when reviewing with your new partner. Schedule a kickoff meeting to align on expectations, document mutual goals, create a roadmap with timelines, and decide on a first project. This project could be some sort of joint marketing, a mutual deal, or even a reselling strategy. Set up a recurring monthly meeting to make sure this project is moving in the right direction and everyone is pulling their weight. But bear in mind that a big partner usually has a lot more leverage than you do in this partnership. So whatever you do, make sure you are delivering on your terms and doing what you can to help your partner achieve their goals [https://startupnation.com/grow-your-business/networking/tips-successful-startup-partnership/] . Measure your outcomes Partnering with industry titans might mean unrealistic expectations or slow-moving activity. And your partnerships are only as good as the mutual benefits you create. Building partnerships takes far too much time and effort to get nothing in return. One way to get ahead of these issues is to set and monitor KPIs [https://www.valuer.ai/blog/how-to-create-a-successful-startup-partnership]. Frame your KPIs based on the goals you set and break them down into monthly, quarterly, and annual metrics. Some examples might be the number and ARR of sourced and influenced deals, time to enable and certify partners, and the quality and quantity of leads as a result of co-marketing activities. Strategic partnerships come with risk, but can also have enormous upside. Doing what you can to mitigate these risks should be top of mind for anyone working in Partnerships一especially at a startup. Becoming a strategic partner involves extensive research, continuous engagement, and diligent planning, but the rewards can really pay off in terms of thought leadership, marketing, and most importantly, sales.
Deep Dive
Insurance for Startups
Daniel Jakaitis / 4 months

Insurance for Startups

Insurance feels like a waste of money until the day you need it. When founding or starting a company, most people only spend time thinking about shipping and selling product — they don't think about the day they are hit with a multi-million dollar lawsuit from a former employee. "Hiscox reports that one in five small or medium-sized businesses will face employment charges with an average cost to defend of $125,000 [https://www.inc.com/marissa-levin/5-things-employers-can-do-now-to-avoid-costly-and-harmful-employee-lawsuits.html?cid=search] ". The last position you want to end up in is paying $1250 per hour legal fees [https://www.quicksprout.com/what-i-learned-from-fighting-a-12-month-lawsuit/] because you didn't read the fine print. "[M]ake sure your policy is flexible enough to allow you to pick your own attorney. The insurance company’s goal is to spend the least amount of money, which means the lawyers they appoint might not be your first pick." You need insurance, but be wary of how you select coverage. Before we talk about where to grab insurance for your business, let's do a breakdown of the 8 types of insurance your startup likely needs: Professional Liability or Comprehensive General Liability * What it does: This is the most basic form of business insurance and protects you against liability for product usage that causes physical damages (property, bodily). * When you need it: Day 1. Once your company becomes a legal entity, you will want to get some form of General Liability or Professional Liability * What amount of coverage to purchase: $2M total coverage is a standard starting point for a small business. * What it costs: starts at $500 per year Errors & Omissions (E&O) Insurance * What it does: Protects against claims against you that are caused by system issues or work provided to customers that result in financial harm to your customer. Almost all major SaaS enterprise contracts will require some type of E&O coverage * When you need it: The moment your platform or product is live and handling customer transactions or data. It is fine to wait until launch day to secure E&O as this type of insurance policy can be set up to cover based on when the claim was made and not when the actual event happened. * What amount of coverage to purchase: This is heavily based on the revenue of your company, size of customer contracts, and sensitivity of processes or systems your product or service deals with. You should work with your agent to determine the right level of coverage. * What it costs: Starts at around $2000 per year Workers Compensation Insurance * What it does: This will cover costs of employee injury on the job. * When you need it: For founders, the moment you decide to make your first hire you should get set up with Workers Comp Insurance. At a certain size, it is required by law to carry workers comp insurance (typically 3 or more employees, but in California you will need it for your first employee). * What amount of coverage to purchase: Start at $750k to $1M. * What it costs: $400-600 per employee per year Property Insurance * What it does: Once your business has a physical presence or storefront anywhere you will want to investigate whether you need property insurance. * When you need it: Typically any company that has warehouses, owns office space, or in some cases, lease offices. Property insurance is occasionally required as part of the terms to lease or sublease a space. It is strongly encouraged if you own any physical properties (warehouses, land, offices) that you acquire Property insurance. * What amount of coverage to purchase: Coverage amount will vary based on lease terms or size and usage of space. * What it costs: Highly variable on the space you own or lease - speak with an agent. Employment Practices Liability Insurance (EPLI) * What it does: Covers costs for defending against lawsuits or paying out settlements and judgments in employment-related cases. * When you need it: In conjunction to workers comp, EPLI can cover employment claims made against the business of several kinds (e.g. harassment, discrimination). Typically, businesses will get EPLI as they move into the >10 employee range. * What amount of coverage to purchase: Around $1M * What it costs: $4500-10,000 per year Cyber (Data Breach) insurance * What it does: This insurance will cover any costs that are incurred as a result of defending or investigating a data breach. If you get hacked, this will prevent your company from completely losing their shirts as a result of legal fees, customer clawbacks, operational expenses from investigations, etc. * When you need it: The second you start storing customer, client, or employee data. * What amount of coverage to purchase: Similar to E&O, this will be highly variable on the types of data you store on behalf of customers and the operating model of your business. Speak with an agent to get a better idea of how much coverage you need. * What it costs: Starts around $2000 per year Directors & Officers (D&O) Insurance * What it does: Covers legal claims against company leadership such as breach of contract or fiduciary duty, mismanagement, noncompliance with laws and regulations, misuse of company funds, misrepresentations of company assets, and failure to comply with workplace laws. * When you need it: If you are seeking your Series A or above you will likely be required to show proof of D&O insurance. Additionally, as your company scales and has more public-facing communications you will likely want this to cover any issues that arise. * What amount of coverage to purchase: Around $1M with increases as your business scales * What it costs: Starts at $5k per year Key Man Insurance * What it does: This provides life insurance for individuals that are critical to the function of the business. This typically can be executives or founders whose passing would result in a substantial impact on the business. * When you need it: Once your business is producing revenue and has a headcount north of 10 employees you should consider getting Key Man policies. Additionally, many Series A or later funding rounds will have a clause that requires proof of Key Man insurance policies. * What amount of coverage to purchase: At a minimum $1M per key person. This should be evaluated as the business scales. * What it costs: Starts at $1000 per year per individual. This will vary widely due to the health and other considerations of the individuals you insure. -------------------------------------------------------------------------------- Where do I get Insurance? Ok - so now we know what you need. Where do you go for insurance? First off, you can find a specialized agent or broker for all of the types listed above. Some common places to start are with online brokers that can aggregate quotes for you. Here are some more tech-friendly startups and brokers that are tackling the process of buying and managing your companies insurance policies: * https://www.vouch.us [https://www.vouch.us/?utm_source=boringstartupstuff.com] * https://withlayr.com/ * https://foundershield.com/ * https://www.embroker.com/ There are also plenty of big players in the space as well such as: * https://www.biberk.com/ (Berkshire Hathaway) * https://www.thehartford.com/business-insurance-landing-page (The Hartford) * https://www.hiscox.com/small-business-insurance (Hiscox) * https://www.chubb.com/us-en/business-insurance/ (Chubb) Side note: The difference between an Agent and a Broker Agents act on behalf of insurance companies — sometimes one or more— to sell insurance to businesses. Brokers, on the other hand, represent the business seek quotes in the marketplace. When buying insurance you can contact several agents or brokers. We recommend working with a reputable broker and also getting independent agent quotes to compare prices. -------------------------------------------------------------------------------- Conclusion * If you operate a tech startup, at the very least, you need GLI and E&O policies and may be legally required to have Workers Compensation Insurance if you have any employees. * As your business grows, reevaluate your coverage costs & needs. It is best practice at a minimum to do this annually, if not quarterly. * Read the fine print. Don't just get as much coverage as possible. You want to make sure coverage terms are what you expect. Lastly, below is a chart from Foundershield [http://foundershield.com/?utm_source=boringstartupstuff] to give you an idea of when in your companies life you should be thinking about these types of insurance:
Deep Dive
Public Relations for Startups
Liz Melton / 4 months

Public Relations for Startups

PR sounds a lot cooler on TV. Who doesn’t want to be as badass as Olivia Pope? In reality, she’s more of a crisis manager than a PR agent, but she still orchestrates exactly how her clients should speak, who they should be speaking to, and how they should behave in order to convey a certain message to the world. Essentially, that’s what PR does (on a far less dramatic scale). PR, or public relations, is about finding ways to disseminate information about an organization to affect public perception. With fewer resources and time on their hands, most startups put PR on the back burner. But there are scrappy ways to approach PR to get you the notoriety you are craving. Read on to understand the difference between traditional marketing and PR, why PR is important, and how to form and implement a short and long-term PR strategy. What’s the difference between PR and marketing? On the surface it can seem like marketing and PR are kind of the same thing. They both encourage people to buy products or services, right? While that’s true, and marketing and PR do have overlap [https://www.linkedin.com/pulse/simple-guide-pr-startups-john-moorwood/], the main difference is that marketing can involve paying for exposure to an intended audience. This can be in the form of social ads, PPC activity, TV commercials, billboards, or even direct mail. PR, on the other hand, is generally thought of as “earned” media exposure. Essentially, you’re only featured in certain publications or outlets because your product, your people, or your customers are impressive to readers. Reporters need to feel like there’s enough to your story that everyone needs to hear about it. Why do you need PR? The overall consensus is that earned media (PR) lends more credibility than paid media (marketing). If you think about it, who would you rather believe一a company telling you they’re a big deal or a publication you trust telling you a startup is a big deal? TechCrunch [https://techcrunch.com/], Business Insider [https://www.businessinsider.com/], or VentureBeat [https://venturebeat.com/] carry significant weight in the minds of consumers and investors. You can say your product is cool until you’re blue in the face and still not get very far. With a pub’s seal of approval, people immediately take notice. This can have an enormous ROI—we’ve all heard stories of website traffic or free trial signups 10x-ing in one day. People put stock in certain media outlets and even in individual writers, particularly those that cover niche topics. It’s important to note that the best kind of PR is real news. Publicizing something when it’s not up to snuff is a huge mistake. Not only will it tarnish your reputation among customers and prospects, it’ll put you straight onto journalists’ blacklists. Make certain you are comfortable with what’s being said and you have the receipts to back it up. Building a startup PR engine The secret to realizing PR success is about establishing short- and long-term habits that help you nail down an enticing elevator pitch, get your name out there, build relationships with writers, and continue crafting interesting stories as your company scales. Before you start It’s tempting to want to jump right in, but there are few things you need to nail down before you even start developing your PR strategy. This includes your: * Audience - Who do you want to speak to? It’s probably potential customers, but who else? VCs? Partners? Potential employees? Each of these audiences has different preferences and habits, which should influence the types of journalists or content creators you want to get to know. * Key message - There should be a driving force behind your PR [https://respona.com/blog/startup-pr/]. Think of the main message you’re trying to get across for each audience you’re targeting. Ensure that this key message is at the crux of each article when it gets published. * Founding story - Everyone likes a good backstory. Make sure you’re able to eloquently and succinctly describe the founding story in a way that props up your key messages and mission. * Website and landing pages - When people hear about you, guess where they’re going first? Your website. It should be in tip-top shape before you reach out to journalists or PR sites. Be sure to have some fact sheets, customer testimonials, and case studies readily available as well. * Professional headshots - This one sounds silly, but every reporter wants images to break up their text. Make it easier on them by having these pictures on hand. * Google alerts - Google alerts are free and are a super useful way to keep track of your competition, find new media outlets, and connect your company to emerging issues or stories. Set up keywords related to your company and industry, as well as ones that your audience might be searching for. Short-Term Let’s say there’s a game-changing product launch or fundraise quickly approaching. You don’t have time to build rapport with writers and cold outreach is rarely fruitful. What do you do? First, lean on your network. Do your investors or fellow founders have any writer contacts? What about your friends and family? Do any of them freelance for relevant publications? You never know, if you have a compelling enough story, there might be someone who is willing to give you and your company a shot. Next, submit ideas to free sites. There are tons of PR sites out there these days [https://www.forbes.com/sites/kateharrison/2014/01/15/3-simple-ways-to-get-free-pr-for-your-startup/?sh=504f19802e34] . Here are some that are accustomed to more last-minute pitches: * HARO [https://www.helpareporter.com/] - Help A Reporter Out (HARO for short) is a platform that allows you to pitch your story to over 75,000 journalists and bloggers at once by submitting a short form [https://app.helpareporter.com/reporters/queries]. HARO also enables you to list yourself as an expert source, meaning your quote could end up in a really popular piece. HARO is free, but you can pay $19/month for a premium plan which gives you first access to journalists’ requests and premium support. * MuckRack [https://muckrack.com/] - MuckRack is a Public Relations Management (PRM) platform that connects you with bloggers and journalists and measures the success of your PR efforts. For the full platform experience, it costs $200/month, but MuckRack has other options like submitting one-line, tweetable press releases for $1 per character. Pro-tip: use tinyurl to reduce characters. * Newswire [https://www.newswire.com/] - If you already have a press release typed up and ready to roll, consider using Newswire. It costs $199 for a one-time distribution to Google News, targeted trade publications, and a whole host of other news sites [https://cdn.newswire.com/assets/other/distribution-pdfs/Newswire_Distribution_Network.pdf?_ga=2.128835980.1042634315.1626819341-1324909307.1626819341] . After the release goes live, you’ll also get a detailed analytics report of the results. Long-Term The key to a sustainable PR engine is forming an outstanding journalist network. Whenever you need an extra PR boost, you simply dip into your Rolodex and pick the best person to tell your story. Of course, building up this pool of contacts isn’t an overnight thing. Dedicate time to: * Creating a Contact List - You don’t want to talk to just any journalist. You want a list of contacts who can cater to the audience [https://www.criminallyprolific.com/pr-for-startups/] you came up with in the “Before” section. Figure out where your audience hangs out online. What are they reading first thing in the morning? What types of articles do they forward to their colleagues? Once you determine what those publications are, you need to find the email addresses of journalists that cover your beat. Try using Hunter [https://awario.com/blog/best-free-or-cheap-pr-tools-for-startups/] or LinkedIn Sales Navigator. * Making connections - After you have a healthy list, it’s time to make connections. Start small by retweeting their Tweets or leaving insightful comments on their articles. If you want to do a warm intro email, make it quick. Explain who you are, why your company is important, and how you can help them source intriguing story material. Whatever you do, don’t be obnoxious. As Neil Patel says, make friends, not contacts [https://neilpatel.com/blog/guide-to-public-relations/]. * Writing killer pitches - Journalists are seasoned veterans, especially in the tech industry, and nothing turns them off faster than a cookie-cutter email. Just imagine how many of those they get per day! Your pitches need to be concise, yet spark their curiosity. Go back to your key messages, value prop, and founding story. What is truly unique about what you’re doing, who you’re serving, or how your product was built? Is there some way to tie your company to a burgeoning trend that’s of particular interest to this specific journalist? Explain what’s in it for them, and tailor your story around that. Help them first so they can help you. * Putting it on the calendar - Again, sounds like a no-brainer, but schedule set times [https://www.growthmarketingpro.com/important-pr-tips-startup/] for following up. Reporters are busy, just like you. They may not see your initial emails or submissions, so feel free to follow up in a few weeks. At the same time, continue to take small actions to let them know you’re impressed by their work. Building trust takes time, so fit it into your routine. * Tracking your success - Not every pitch will work out, even with the reporters you know the best. Keep track of which pitches work and which don’t. Try to find patterns among the ones that didn’t work well, and improve upon those in your next batch of reach-outs. As an aside, if a writer declines, do not pressure them. Respect their time, requirements, and interests. Being deferential now can pay off in the future, since they may think of you the next time they hear about a similar topic. Plus, writers talk, so don’t be the annoying person they gossip about. The hardest part of PR for startups is figuring out how to express what your company does and what makes it unique in a way that grabs journalists’ attention. What makes this even more competitive is that many companies hire outside firms to do this work for them. But remember, you’re in it for the long haul. By getting the wheels turning on your PR strategy early, you can win over journalists, customers, and investors with little monetary investment.
Culture
Improving Mental Health at Your Startup
Daniel Jakaitis / 4 months

Improving Mental Health at Your Startup

This past March, Indeed.com released survey results indicating that more than half of current employees are feeling burnt out, with over two-thirds attributing the burnout to the ongoing pandemic [https://www.indeed.com/lead/preventing-employee-burnout-report]. Prolonged burnout can have serious consequences—both for individuals and their teams. Symptoms of employee burnout [https://www.mayoclinic.org/healthy-lifestyle/adult-health/in-depth/burnout/art-20046642] include increased cynicism and difficulty engaging at work. Oftentimes, this leads to decreased productivity and a lack of job satisfaction. Burnout and mental well-being in startups are even more precarious than in traditional work settings. Tight deadlines combined with fewer resources, a lot of ambiguity, and a high likelihood of failure place substantially more stress on startup teams and founders. With all this in mind, it is important to set up guardrails early on to ensure you and your team are paying attention to mental health. Here are a few of our recommendations to alleviate burnout and reduce mental stress across your organization: Require paid time off every quarter Startups are known to provide unlimited PTO policies, but few people take advantage of the benefit. Managers and founders need to enforce PTO. Require a minimum number of days off per quarter, and set up quarterly reminders to check in on people who have not taken any time off. Lastly, make sure people truly disconnect from work when on PTO - this means setting up out-of-office messages and muting Slack. When you’re taking time off, don’t apologize for it. Knock it off with the Zoom happy hours Along with the pandemic, zoom happy hours need to end. While fun the first one or two times, post-work team events over video conferencing tools have gotten out of hand, and are doing more damage than good. Most people already spend hours per day sitting in front of their webcam; the last thing they want to do is spend another hour listening to one or two people run a conversation. As a better solution, give people time to unwind and give everyone credits for Drizly or Grubhub to grab drinks or dinner on their own terms. Get everyone together – safely Get your team together for something as simple as lunch or in-person meetings. Facetime is still extremely valuable in this remote-first world. At the end of the day, people stay at a company because of their co-workers and managers. If your team has gone fully remote, do this at least once per quarter. Of course, this recommendation comes with the major caveat of having appropriate safety measures. Compensation isn’t just about money Salary and equity are still the core form of compensation for most companies. But a quick way to stand out is to offer expanded ancillary benefits. Some of the largest stressors today involve healthcare and childcare. Consider no-premium health insurance coverage and expanded child care offerings through things like a DCFSA [https://www.fsafeds.com/explore/dcfsa]. Top firms are even offering subsidized daycare and after-school programs. This is not viable for every firm, but there are other creative options like giving new parents a years-worth of diapers. And for those without children, doing things like sending your employees a new desk plant [https://www.livelyroot.com/collections/plants-as-gifts] or paying for subscriptions to meditation apps and at-home exercise programs can be game-changers. Limit communication outside of work hours to emergencies only This is a tough one for startup founders and operators. While speed is the name of the game in the startup world, you need to keep things in perspective. Constantly pinging team members on weekends and in the evenings may move the needle in the very short term, but it will erode team morale over time. Mental health is important for the entire company, but for founders especially. Carrying the weight of people’s livelihood on your shoulders takes its toll. If you are a founder, you should work with an executive coach to help you through the tough times of the business. What’s even better is working with a professional therapist to discuss personal challenges that evolve from your startup stress. Don’t be shy about opening up and finding help when you are struggling.
Deep Dive
What is LTV, and why does it matter?
Liz Melton / 4 months

What is LTV, and why does it matter?

LTV, or lifetime value, is a benchmark for the health of a business, no matter the industry or model. A high LTV can indicate brand loyalty, good product-market fit, and viable unit economics [https://www.bigcommerce.com/ecommerce-answers/what-is-customer-lifetime-value-and-why-is-it-very-important/] . In contrast, a low LTV could suggest issues with customer retention, product selection, or even marketing. Steadily improving lifetime value will grow your bottom line. According to HBR, a 5% increase in customer retention can increase a company’s profitability by 25% to 95% [https://hbr.org/2014/10/the-value-of-keeping-the-right-customers]. To achieve those kinds of results, it’s crucial to understand LTV and start incorporating it into your startup metrics as soon as you start collecting customer data. In this piece, we’ll define lifetime value, explain why a healthy LTV is essential to your business, and offer a few tips for calculating LTV and fitting it into your reporting cadence. What is lifetime value? Think of lifetime value as the sum of money a customer will bring your company for the duration of your relationship. Take a second to pause and think about your personal LTV for your favorite coffee shop, clothing store, or gas station. Yikes for you, good for them! Of course, there are other places that you’ve only patronized once in your whole life, right? So LTV varies from customer to customer. As a business, you want to reduce the number of customers who are “one-and-dones” and draw in prospects who will stick around and bring you the most value over their lifetimes. Several things influence LTV (customer satisfaction, product-market fit, etc.), so many companies use LTV as a point of reference and start digging in when the number goes up or down. While calculating the total number of orders for each customer seems simple, it gets more complex as you start to consider the unique ways your business operates and how it might grow and change in the future. How do you calculate LTV? Depending on who you ask, you might get a different answer for how to calculate LTV. That’s because how much data you have and how you structure your business have a lot to do with it. However, as a baseline, the simplest way to measure LTV [https://useinsider.com/what-is-customer-lifetime-value-clv-and-why-does-it-matter/] is: > Average Order Total ($) x Average Number of Purchases (per year or month) x Average Retention Time (years or months) The formula represents the lifetime value of your average customer in dollars. The more orders you have to go off of, the more accurate this number will become. This is where eCommerce companies have the edge over SaaS companies with much longer sales cycles (at least at first). It’s also important to note that this basic LTV formula does not consider profit margins or the costs associated with acquiring each customer [https://www.forentrepreneurs.com/saas-metrics-2-definitions-2/]. LTV can drastically differ from customer to customer, so companies segment their customers into targetable personas [https://www.profitwell.com/recur/all/calculate-customer-ltv] (age, gender, product purchased) and see how the average LTV changes. Groups with low LTV are prime candidates for customer research. For example, you might find that one of your products works particularly poorly for a certain segment of your customer population because of its specific characteristics. You might’ve also heard the term “CLV” or customer lifetime value [https://mailchimp.com/clv/]. CLV is essentially LTV, just at the individual customer level. Sometimes, companies will include acquisition cost and profit margin to make the number more precise: > (Lifetime Value (Order Total x Number of Purchases x Retention Time) × Profit Margin) – Acquisition Cost Regardless of what method you choose, LTV can help you brainstorm better promotion, retention, and acquisition strategies. Why are LTV and CLV important? Once you’ve nailed down your method of calculating LTV and CLV [https://corporatefinanceinstitute.com/resources/knowledge/valuation/cac-ltv-ratio/] , you’ll be ready to delve deeper into how each lever (order value, purchase frequency, and customer lifespan) affects your business outcomes. To pull out more details from your LTV calculation, here are some questions you can start to ask: * Why are order values high/low? Is there some kind of messaging that’s convincing people to buy more expensive products? * Are we making or losing money in the long-term by offering free samples or discounts? * Are we spending an awful lot on customer acquisition on Facebook and Google but only getting low LTV customers to convert? * Should we implement a loyalty program to keep our high LTV customers around and bump low LTV customers up a level? * Who is our most valuable segment, and how can we acquire more of those customers? * What do our customers think of our product quality? Are they running out of our product and buying more or simply not coming back? * Should we consider a subscription program to hit our retention goals? * Are there signs that we might need to expand our ideal customer profile to include other types of prospective customers? If you want to get really fancy, you can start to forecast LTV. Keep in mind that you need several years’ worth of data for sophisticated modeling and LTV prediction [https://medium.com/bcg-digital-ventures/grow-margin-based-marketing-2-0-bd5de5ce30f3] . But if you can manage to do it, it will help your finance team with FP&A [https://boringstartupstuff.com/newsletter/yipit-data-cfo-eric-lesser-interview] , your product team with new launches, and your marketing team with enhanced segmentation. How does lifetime value fit into other company metrics? LTV is informative, but it becomes even more powerful in the context of other metrics your startup will be tracking. Here are just a few: * Customer acquisition cost - Otherwise known as CAC, refers to the cost of gaining a new paying customer. Typically companies compare LTV to CAC as a way of determining whether their marketing spend is reasonable. If a company’s LTV:CAC ratio is less than 1, they’re not doing so hot. There could be issues with the customers they’re bringing in, or they are spending too much money on acquisition, or both. If the LTV:CAC ratio is greater than 1, the company is generating value, but more could be done. An LTV:CAC ratio greater than 3 is often considered healthy [https://firstmark.medium.com/a-crash-course-on-the-subscription-metrics-that-matter-with-freshlys-cpo-3ccd7b0add67] . * Revenue retention - Your net revenue retention (NRR) is the percent of recurring revenue from existing customers during a set period. LTV comes into play because it encapsulates the purchase frequency (more applicable to consumer goods) and the average order value (more applicable to SaaS and subscription businesses with consistent purchase timing but flexible order value). Breaking out NRR from LTV can help you figure out whether to focus your efforts on more conversions, upsells, and cross-sells. * Churn rate - If you recall, customer retention is a major part of the LTV equation. So if your churn rates start to skyrocket, you’ll feel it in your LTV. A quick way to think about this is to measure your customer lifetime as 1/churn rate. Let’s say you’re looking at a monthly churn rate of 4%. In this case, the customer lifetime will be 1/.04, or 25 months. If you can get that down by one percent, your customer lifetime will extend by 8 months (33 months - 25 months). If your average order value, purchase frequency, profit margins, and CAC stay the same, that means you’ve gotten a massive boost in LTV. LTV in the early days of your startup Frankly, it’s hard for early-stage startups to pay close attention to LTV. With things constantly changing, it’s hard to tell what might be moving LTV up or down. And to do even the most basic calculation, you need customer data. That said, LTV will matter in the future, particularly in relation to CAC, if you’re going the product-led growth route [https://boringstartupstuff.com/newsletter/product-led-growth-what-is-it-and-how-do-you-do-it] . So now that you know what subcomponents you need to calculate LTV and CLV, make sure you have a plan to capture the proper customer data points over time. Not only will LTV help you identify ways to strengthen your business model, it will also help you attract the highest value customers and develop the best products in the market.
How to
First Time Founder Finance Stack
Daniel Jakaitis / 4 months

First Time Founder Finance Stack

You’ve got a golden idea, a solid product, and maybe even a few customers. You think this thing has legs, and you are ready to go after it. Suddenly you realize that running a startup isn’t just about building products late into the night. How will you pay people? How are you going to manage the company finances? How do you keep track of your cap table? Searching for the right tools today can feel like sifting through a landfill. Most google searches provide four or five advertisements before returning what you want, and every other website discussing startup financial stacks is getting kickbacks for writing a 1500-word piece on the latest hot finance tool. To help you hit the ground running, we have done some legwork for you. Here is our unsponsored, opinionated, self-tested startup financial stack. For Managing Your Cap Table: Carta [https://carta.com/] Carta is hands down the best cap table management tool out there. Incumbent software platforms like Capshare are sloppy and challenging to use. The best part is that Carta is absolutely free to start. Just upload your documents, issue certificates, and boom, you have a cap table! Cost: Free until you need a 409a [https://a16z.com/2020/02/13/16-things-about-the-409a-valuation/] For Managing Your Accounting: Quickbooks [https://quickbooks.intuit.com/] Quickbooks is the industry standard for accountants. Full stop. If you haven’t run your own books before, we strongly recommend sticking with the industry leader. Not only is Quickbooks online great to work with, it offers deep integrations with every other tool you could imagine. Cost: $25 a month For Running Payroll and Benefits: Justworks [https://justworks.com/] Many PEOs require at least 5 employees to be eligible for insurance. If you need insurance day one, there is no better option than Justworks. Cost: $49 a month per employee For Handling Bookkeeping: Pilot [https://pilot.com/] Pilot offers a handful of fractional CFO services. The first thing you will need is help with bookkeeping. At $599, Pilots bookkeeping service is a steal and gives you peace of mind. Our favorite part about Pilot is its direct integration with Quickbooks, giving you the ability to scale up to more sophisticated financial needs when you are ready. Cost: $599 for bookkeeping a month For Keeping a Checking Account: Mercury [https://mercury.com/] SVB gets a lot of airtime and does a good job marketing to the startup industry. But honestly, Mercury wins out. Easy virtual card issuing, simple account setup, no wire fees, and no monthly fees make Mercury a no-brainer. Cost: Free! For Managing Team Expenses: Divvy [https://getdivvy.com/] Divvy sits at this weird crossroads of accounting, expense management, and corporate credit. Luckily, with easy integrations to Quickbooks, Divvy offers its core feature set for free. Expense management is incredibly simple to setup, and, when you are ready, Divvy offers credit lines and other premium features. Cost: Free! For Modeling Runway and Burn: Microsoft Excel [https://www.microsoft.com/en-us/microsoft-365/business/compare-all-microsoft-365-business-products] Your finance stack would be incomplete without the beloved Excel. While we strongly recommend using Google Workspaces as your email and cloud directory provider, you still should get your team access to Microsoft Excel. Cost: $12.50 a month per employee With this stack, you will be spending around $1,200 per month for a 10-person startup. Of course, this will scale as you grow. You should anticipate spending several thousand dollars on CFO services from Pilot and your 409a valuations by Carta.
Deep Dive
6 Ways to Get Started with Marketing for eCommerce Startups
Liz Melton / 4 months

6 Ways to Get Started with Marketing for eCommerce Startups

For consumers, picking out a new beauty product, wrench, or mouse is relatively easy. For eCommerce marketers, getting consumers to pick their product is very hard. And for startups, influencing customer decisions matters. Without an adequate marketing strategy, eCommerce startups won’t get the traction they need to sustain their business. Fortunately, there are some tried and true ways to market an eCommerce startup that you can build on iteratively over time. Below, we define eCommerce marketing and outline 6 strategies to get started. When you boil it all down, eCommerce marketing is about making consumers aware of your online store, convincing them to convert, and reminding them to purchase again. While simple in theory, eCommerce marketing is tricky in practice. There are so many eCommerce stores now, making price and value comparison easy and competition stiff. To stand out from the crowd, you need a comprehensive strategy [https://blog.hubspot.com/marketing/ecommerce-marketing] involving social media, original content, and paid campaigns. And all this must be tailored specifically to your target audience. However, when done well and early, eCommerce marketing can change the trajectory of your startup. 6 ways to get started with eCommerce marketing Starting your eCommerce marketing journey can be overwhelming. Luckily, there are some dependable methods of boosting your online presence and driving customer acquisition [https://boringstartupstuff.com/newsletter/6-tips-for-unconventional-customer-acquisition] . Let’s dive in. 1. Sell great products No matter how hard you try, it’s difficult to kill the marketing game without great products or services. Even the most compelling copy, best paid ad strategy, and coolest influencers can’t make up for a dud of a product. If customers fall for that trap once, they won’t be fooled twice. So to attract and retain customers, you need an excellent product(s). But let’s say you have that. Shouldn’t product-led growth [https://boringstartupstuff.com/newsletter/product-led-growth-what-is-it-and-how-do-you-do-it] start to work its magic? If only it were that simple! The way to double or triple your growth is to focus your marketing efforts on the products that are in the most demand. After all, if customers aren’t even searching for your product, how will you ever capitalize on them? eCommerce merchants are experts at figuring out which of their products are—or, more importantly, could be—in most demand. Experts look at similar Amazon bestsellers, join communities on Reddit, watch trending items on Etsy [https://www.business2community.com/ecommerce/10-first-steps-take-marketing-ecommerce-startup-01853924] , browse Pinterest, and monitor certain hashtags on Instagram. Consumer research helps you identify what’s popular, what the white space is, and shows you how marketers and consumers talk about each product. This can give them ideas for new content, SEO keywords [https://www.ecommerceceo.com/ecommerce-marketing/], and more. Lastly, make sure you have a sound pricing strategy. If your target audience doesn’t feel your pricing reflects your product’s actual value, they won’t return. Research your competitors and test out different options [https://www.bigcommerce.com/blog/ecommerce-marketing/#executing-an-ecommerce-marketing-plan] to find your sweet spot. 2. Nail down your persona(s) Once you’ve determined which products to focus on, it’s time to figure out who you want to buy them. Identifying who your customer is and what they care about will serve as a foundation for the rest of your strategy. A good way to start developing a profile is by asking the following questions about your ideal customer or set of customers: * How old are they? * What’s their gender? * What is their purchasing power? * Where do they hang out online? (Instagram, TikTok, LinkedIn, Reddit, Pinterest) * Where do they live in the world? * What else do they buy that’s in a tangential market? * Why would they buy your product? * What problems do they have with similar products (and why would yours be a better fit)? Home in on the problem you’re solving for each persona. Fixing the customers’ issues should be the central theme for any content, ads, and social media posts. Understanding what makes your customers tick prepares you to appeal to their pathos, logos, and ethos. The rest of the information you collect about your customers can personalize your copy, highlight your product on the right platforms, and form partnerships with other complementary brands [https://welpmagazine.com/a-complete-guide-to-marketing-strategy-for-ecommerce-startup/] . 3. Create a sound content strategy According to Google, 53% of shoppers say they always research [https://www.thinkwithgoogle.com/consumer-insights/consumer-trends/shopping-research-before-purchase-statistics/] before they buy something. Guess what they are reading? Content. Educating consumers on your product, the space you play in, and other related products only help people better understand what you offer. Another advantage to content is that it can establish your company as a thought leader. If your content is good enough, people will reshare articles on other platforms, generating even more site traffic. In addition, content can open the door for future upsells and cross-sells. Once people convert, they’ll probably be interested in and read about your other product offerings, so make sure your site is a valuable resource. Plus, content is a great way to amp up your search engine results page rankings [https://www.coverwallet.com/business-tips/digital-marketing-for-ecommerce-startup] . By inserting pertinent keywords and presenting relevant information, you can get users what they are searching for, fast. This isn’t just about blog posts, either. Think about how you can guest post on other blogs to gain backlinks, beef up your product descriptions and landing pages, and create free content that people can download in exchange for their email address. With the right SEO strategy, you can move up the results page, leading to more clicks. The best part is, those clicks are free. Yes, you have to pay someone to write for you, but you’re not wasting money on paid campaigns that may or may not work. Having said that, SEO is a long game. To get those top spots, you need to be publishing excellent content often. 4. Use social media to your advantage Social media is a fantastic way to get brand recognition quickly [https://justcreative.com/best-ecommerce-growth-strategies/]. If you can build up a large following, more and more people will reshare your posts, bringing you more and more attention. For eCommerce marketing, Instagram, Youtube, and now TikTok are the social media platforms of choice. All three are very visual, giving you the chance to show off your products’ look and feel. Instagram is a particularly solid choice because you can create shoppable content that enables visitors to add products to their cart and buy instantly. And once they make a purchase, many consumers decide to tag your company on their social media accounts, further advocating for and legitimizing your business. Some eCommerce marketers also dip their toes into influencer and affiliate marketing. With influencer marketing, you get “famous” people or brands to promote your product on social media and pay them an upfront fee. We’ve seen this in traditional marketing before (remember Icy Hot with Shaq [https://www.youtube.com/watch?v=1jJun_1dII0]?), but this method is even more specific because you target celebrities or communities that your ideal customer follows. Affiliate marketing is similar, but instead of paying at the beginning of the campaign, you pay them a commission based on the number of new customers you get. This can be a more affordable and cost-efficient way to extend your social media reach. 5. Email isn’t dead While you might think that email isn’t a worthwhile marketing tool anymore, think again. McKinsey found that email marketing is up to 40 times more effective than social media [https://digitalagencynetwork.com/email-marketing-still-effective-strategy/] and makes the buying process three times faster. Email marketing is a time-tested strategy for reaching, nurturing, and retaining very specific audiences. With an email list of highly interested prospects and current customers, you can showcase: * Product photos * Witty or fun brand language * New blog posts * Newsletters * Free informational content * Social proof (customer reviews or posts on social media) * New product releases * Product bundling packages * Personalized product recommendations What is more, email is a great place to experiment. Try out different ways of communicating with your audience. Add in gifs or emojis to spice it up. Use new taglines and captivating photos. Host a giveaway or ask directly for audience input on a new product line [https://bettermarketing.pub/low-cost-e-commerce-marketing-strategies-for-startups-ef957e423d6d] . With the right mix of fun, exciting content, and strong calls to action, you can get prospects and customers excited to receive your emails and, ultimately, get them to convert. 6. Paid campaigns We saved paid campaigns for last since startups are always strapped for cash. That said, growing your social media presence, building up your search engine rankings, and getting email campaigns to work can take a while to get going. So if you do have some money to spare, pay-per-click (PPC) campaigns can be fruitful. Their sole purpose is to drive traffic to your site in short bursts of time. Since PPC campaigns can get pricey fast, work them into other elements of your strategy. For example, you could promote a landing page that asks customers to sign up for an email list, download free content, or follow you on social media. From the Facebook or Instagram ad, you’ll get more site traffic, email addresses, and followers. In the end, all three can fuel the sales flywheel. Don’t forget analytics The 6 steps summarized above are important, but analytics is your eCommerce marketing superpower. Gathering the outputs from all of your campaigns and combining that data with sales data (who buys what, when, and for how much) and customer behavior data (email open rates, social media engagement) can help you sharpen your strategies and lead to greater personalization. And personalization is your silver bullet. BCG finds that companies that use personalization are seeing revenue increases ranging from 6-10% [https://www.bcg.com/publications/2017/retail-marketing-sales-profiting-personalization] . When you update someone’s name in an email subject line, suggest products tailored to the person’s behavior, and show content relevant to an item they checked out on your website, you show them that you aren’t just marketing to the masses. You care about them, specifically. Add a quiz to your website to get even more valuable information (see Madison Reed [https://www.madison-reed.com/] , Hims/Hers [https://www.forhims.com/], and ThirdLove [https://www.thirdlove.com/] for examples). Not only will a survey increase the chances someone will buy a product that’s well-suited to them, the results will give you insight into other products they might be interested in down the line. As you embark on your eCommerce marketing journey, try these out and let us know how it goes!
How to
Running an Effective Employee Onboarding
Daniel Jakaitis / 4 months

Running an Effective Employee Onboarding

An employee's first few days at your company are formative. Providing a structured onboarding program and making new hires feel welcome sets a tone that will carry forward through the rest of their time at your startup. With attrition risk at an all-time high according to SHRM [link], doubling down on new hire success is an effective first step in a long-term employee engagement and retention strategy. Drive your team culture forward by providing new team members all of the resources and instruction they need to make an impact on day one. By segmenting the onboarding process into three buckets, you can define consistent checkpoints for new hires to keep them on track. The goal is to set your new hire up for success -- don’t let them down. Here is a punch list of things to make your new hire onboarding memorable and successful. Pre-onboarding Onboarding starts the moment your new hire accepts their offer letter. To set yourself up for success on Day One, follow these steps: * Set internal expectations - The hiring manager and team should structure all the measurements of success for your new employee. This includes laying out the first projects to be completed by the new hire and checkpoints at which they should be evaluated. In most cases, this can simply be a job description (hopefully you have one of these written already). * Send a welcome email - A welcome email should go out within a week of the offer being accepted. Be sure to include all of the relevant Day One information such as time to show up (and the address!), dress code, whether to bring lunch, any forms of ID needed for paperwork, etc. This email is also a great opportunity to start the onboarding process. Send along any marketing or sales materials that might help the new hire get up to speed with what the company has to offer. * Bonus Tip: Send a second email 24 hours before their start date to remind them of any last details regarding their first day. * Send out their swag pack - There are few things startup employees love more than some awesome swag. Whether you send fanny packs or snapbacks, get everything together for your new hire. If you are a remote team, send the swag via express mail so it arrives precisely on their first day. Day One The first day on a new job is full of nervous handshakes, anxious note-taking, and a ton of new faces to remember. Make it as easy as possible for your new hire to get acclimated by having a full day scheduled for them as soon as they get in the door. Your first day calendar should include the following: * Meeting a buddy - Having a buddy can help new hires navigate internal matters such as HR or Payroll, get introduced to team members, and establish friendships, making the entire transition process so much less stressful. Make sure to select someone who represents your startup well and will make your new hire feel welcome. * Tackling the paperwork - Setup a time slot(s) for the new hire to meet with HR to complete any relevant paperwork first thing in the morning. Getting this done early means it won’t disrupt learning sessions later in the day. * Enjoying a eam lunch - Who doesn’t love a free lunch? If you are a remote team, send team members UberEats credits or offer reimbursement and have the team hang out on a group Zoom. For those in the office, this offers a great chance to show off the neighborhood and get out of the office for a little bit. * Scheduling a hiring manager 1-1 - Even if the hiring manager's schedule is jam-packed, new hires should take precedence over nearly anything else going on at the company. If you are a remote-first organization, it is a good practice to set up multiple 1-1 touch points on Day One -- once at the start of the day and once at the end of the day. This provides your new hire a good set of bookends to their first day at the company. * Setting up training meetings - Get at least 1-2 afternoon training sessions on the first day from subject matter experts (SME). Setting these up on day one sets a precedent for getting things done and throws the new hire into the thick of it right away. * Telling them when it’s OK to leave -  You would be shocked at how late a new hire will stick around their first day twiddling their thumbs. Make sure they understand the work culture around hours of business. The First Couple of Weeks Day one jitters wear off quickly. By the end of the first week, your new team member should know the tools and teams they will be working with. Within the first week, you should set some goal posts for accountability to guide your new hire to success. * Give them a concrete completable task - Explicit direction to tackle a small, easy win will make them feel accomplished as a new hire immediately. This can also bring an added benefit of self-driven training. For example, software engineers could be assigned a small bug to fix. This forces them to set up their environment and checkout code from the company repositories -- each of these steps being critical to a successful workflow for an employee. * Expanded SME and cross-team training -Get your new hire in front of different teams and educate them on what people do at your org. This should cut across sales, engineering, marketing and finance. If you are on a hiring blitz, it is best practice to batch new hires together so SMEs and cross functional team leaders can schedule group training sessions. * Happy Hour! - Get everyone out of the office for a little bit and grab a drink. For many, this will help break this ice a little better. Don’t make this too formal or overthink it, but make sure the invite is explicit enough so that new hires feel welcome. The First Couple of Months It is hard to quantify the impact of a new hire until at least a few weeks, if not months, have passed. But within the first few months, you should at least be able to establish long-term guard rails for your new hire. A few suggestions for the first few months: * Set up annual goals and OKRs -  Explain your team's process around OKR/KPI tracking to ensure the new hire understands the team's core focus. Demonstrate to the employee what success looks like in their new position by walking them through high-quality samples of work. Establish the framework by which they will be evaluated in the review process (if you don’t have a review process, maybe it's a good time to start thinking about one [https://boringstartupstuff.com/newsletter/how-to-do-annual-performance-reviews] !). * Survey the new hire for feedback - What better way to improve your onboarding process than to get feedback from someone who just went through it! Even informal feedback during a 1-1 is hugely beneficial for your process and shows to the new employee you care about the onboarding experience. * Automate future touch points - Tools like Gather [https://www.teamgather.co/] can automate touchpoints with new (and existing) team members around fun topics like  upcoming birthdays or serious ones like monthly reminders to complete KPI reports. Gather has several playbooks to run your entire onboarding process! [https://www.teamgather.co/people-operations-playbook?moments=onboarding] * Setup Some Continuous Touch points - On your calendar, schedule relevant meetings for the future. This should include consistent 1-1’s between the new hire and their hiring manager, skip-level 1-1s (or CEO 1-1s), and any cross-functional meetings that are part of the new hire’s range of responsibilities. Even minor attempts at structuring an onboarding process will pay dividends.  Failing a new hire by not providing a smooth onboarding process will increase your attrition rate and be a drag on the broader team.
How to
The Anatomy of a Good Offsite
Liz Melton / 4 months

The Anatomy of a Good Offsite

What do you think of when you hear the word “offsite”? If “snoozefest” or “waste of time” are the first words to come to mind, you’re not alone [https://www.inc.com/antonio-neves/4-ways-to-to-run-an-offsite-that-wont-become-a-snoozefest.html] . It’s easy for company offsites to devolve into extra-long status meetings complete with cold coffee and mini water bottles. It’s also common for offsites to swing in the other direction, a little too fun to get any work done (peep the latest WeWork documentary). So, what qualifies as a happy medium, and is it possible to achieve? When done right, your offsite can inspire, motivate, and align your teams towards shared goals and prepare them for times of high growth. In this piece, we cover the elements of a successful offsite so you can establish a process for hosting unforgettable and productive gatherings every year. Nail down your goals The first, most important thing you need to do is crystallize your goals. These objectives should center around what you hope to accomplish at the offsite. Objectives can be broad since you ultimately want participants to comprehend, accept, and act on them. Offsites are costly, so it’s essential to get your attendees to rally around shared objectives before you even go. Here are a few ideas [https://hbr.org/2019/07/6-tips-for-running-offsites-that-arent-a-waste-of-time] to get you started: * Promote reflection on last year’s performance and facilitate structured discussions around how it can be improved this year * Work together to establish critical priorities and KPIs that the entire team commits themselves to * Generate a plan for achieving strategic goals with the help of leaders from multiple teams * Build rapport among remote team members who have never met each other or rarely worked together, even in the office Of course, when you craft your agenda, you’ll want to delve into more specific topics, such as “sales strategies to hit $X in revenue by the end of next year” or “solidify the roadmap to launch X new product.” But having broad objectives can help your participants feel like they can engage in more thoughtful, creative discourse and will make the offsite a team-building event as well. Get feedback ahead of time Not everyone will be present at the offsite, but that doesn’t mean their opinions shouldn’t be heard [https://fundersclub.com/blog/2017/04/27/guide-to-offsites/]. Think about sourcing an informal SWOT (strengths, weaknesses, opportunities, and threats) analysis via a Google form. Ask department heads to send surveys to their teams a few weeks ahead of the offsite so you can share results with the group ahead of time. Of course, you may not use all the input you get, but it doesn’t hurt to hear your employees out. It makes them feel good that leadership cares about what they think and gives them the chance to express themselves. If particular trends are popping up, add them to the agenda. At the very least, employee feedback will get your offsite attendees’ creative juices flowing. Set an agenda Agendas are like OKRs一you may not like them, but you have to admit they are usually effective. First, agendas can timebox your discussions. Sometimes topics can get heated, and agendas help you end the conversation, take a break, and return to the parking lot later, keeping things moving along. Agendas also ensure that you cover everything you want to [https://www.techstars.com/the-line/advice/6-tips-for-an-impactful-virtual-team-offsite-lessons-learned-from-the-techstars-community-team?utm_source=hootsuite&utm_medium=&utm_term=&utm_content=&utm_campaign=] . With so many things happening, it’s easy to forget about the more minor, but still important, initiatives and go home without talking about them at all. Use your SWOT results as a jumping-off point, adding in other topics leaders want to address. Not only do agendas keep everyone on track, they also give people a chance to plan out what they are going to say. This is particularly helpful for more introverted folks on the team who want to think about their responses to big questions and brainstorm some strategies for large projects beforehand. Plus, people need downtime, and agendas can help schedule breaks as well. In addition, agendas allow you to delegate tasks, like ordering meals, designating discussion leaders, and assigning notetakers. Send the agenda at least a week ahead of your offsite to get everyone on the same page and to give yourself ample time to make changes. You might even review the agenda with each person individually to ensure it captures what they want to get out of the meetings. Lastly, compare your agenda to your goals to ensure you hit on everything. It sounds like a lot of work up front, but the time you put into your agenda pays dividends in terms of people’s participation and creativity [https://medium.com/ideo-stories/eight-tips-on-running-a-great-team-offsite-14d8d42a91bb] . Limit the number of people Having too many people at your offsite is a recipe for disaster. Multiple viewpoints is a good thing, but not if it details the agenda. Many founders suggest a group of 5 - 10 people [https://www.atlassian.com/blog/inside-atlassian/how-to-facilitate-successful-offsite-meetings-human-dynamics] , starting with the executive team. From there, try to map potential attendees to your main offsite objectives and consider having diversity in terms of expertise, tenure, and role. You might have some hard decisions, but narrowing down the invite pool to the people with the most relevant input will make for better, more efficient sessions. By the way, this doesn’t mean that the outcomes of the offsite should stay a secret among attendees. Set aside time at the end of the offsite to figure out the best way to disseminate the right information to the right employees. Get out of the office It’s tempting for startups to hold offsites at their office to save money, but that’s a mistake. Even the word “offsite” implies that you should be getting out of the office and into a new environment. Think about renting a short-term space, a hotel conference room, or even an Airbnb in a stunning location. It’s an investment, but your employees will be excited to get away for a few days and enjoy each other’s company. That said, the place you choose should limit distractions [https://www.inc.com/alexa-von-tobel/how-to-run-an-effective-team-offsite.html] so that everyone feels productive and focused. Ensure the spot is accessible to everyone and bring materials like whiteboards, markers, sticky notes, flip charts, notepads, and pens. Something else to think about is picking a location you can return to year over year. This makes offsites feel like a fun tradition, and who knows, maybe you’ll get a discount. Talk about your people “Talk about your people” sounds like a gossip fest, but that’s not what this is about. If you’re planning for the next few years, you’ll need to talk about current performance, company culture, hiring strategies, preventing burnout, increasing retention, and more. Discuss feedback you may have gotten from direct reports. Do people feel recognized and rewarded? Do they feel compensated for their work? Do they want to come back to the office or stay remote? Is there any tension between teams that need to be addressed? Have attendees come prepared to talk about the individuals on their team, with identified attrition risks and individuals who are good candidates for more strategic roles. Each person should have a pathway for success [https://review.firstround.com/use-this-startups-playbook-for-running-impactful-virtual-offsites] 一whether that be at your company or elsewhere. Infuse some fun Don’t forget to make the offsite at least a little fun! You don’t always get so much time together, so make the most of it. Depending on where your offsite is, consider ending the day with a beautiful hike, a nice dinner, a scavenger hunt, or some karaoke. Fun activities don’t need to be relegated for the evenings, either. Maybe you have a chef teach everyone how to make a delicious lunch, or you make time for mini-massage breaks between sessions. Whatever you do, make sure it doesn’t feel like your usual office culture. The whole point of an offsite is to stimulate people’s brains, foster some team building, and get everyone jazzed about the future of your company. Wrap up with accountability Your offsite can’t be all talk一there has to be an execution plan. End the offsite with an exercise in which everyone assigns roles and responsibilities to each new project or priority. Ask yourselves how you’ll hold each other accountable, whether that’s monthly or quarterly check-ins, presentations, or something else. Be sure to compile and share notes from the closing session so that leads can review the information and disseminate pertinent sections to their teams later. These notes will also assist you if you need to present an overview of the offsite to the Board and CEO. So that you’re not leaving everything until the end, tack on 10-minutes to the end of longer sessions to recap and write down action items. Not only does this make wrapping up go faster, it also forces participants to reflect on what they learned and what they’re taking away from each session. With adequate planning, input from employees, a killer location, and fun activities, your offsite can feel completely different than a long day at work. When everyone brings their A-game, offsites are the most valuable few days of the year. Let us know if you have some offsite tips一we’d love to hear them!
Deep Dive
Vendor Procurement and Management at a Startup
Liz Melton / 4 months

Vendor Procurement and Management at a Startup

Most employees would accuse procurement departments of being overbearing bad cops, shooting down most purchase requests, and trying to find every gap in security questionnaires. Well-designed vendor procurement and management processes do companies a huge solid. They help cut costs, set companies up for successful compliance audits, and mitigate future risks. Although you may not think your startup needs procurement or vendor management policies now, you’ll be glad you established them early [https://www.entrepreneur.com/article/79798]. Building a framework for vendor selection early on will lead to better profit margins and prevent wasted time on rip-and-replace projects. This article will cover the difference between vendor procurement and vendor management, the benefits of instituting vendor guidelines from the get-go, and some ideas for putting policies into place. What’s the difference between vendor procurement and vendor management? Vendor procurement and vendor management go hand-in-hand, but they aren’t the same thing. Vendor procurement is a method of assessing potential vendors, lowering purchase costs, and ensuring that companies enter into contracts with minimal risk [https://zipordering.com/en/procurement-process/vendor-procurement.html]. Procurement involves arranging and listening to demos, testing out proof of concepts, and entering into pricing negotiations when it comes time to buy. Procurement reads the fine print and works closely with legal teams to ensure the company is protected if anything happens to the vendor (i.e., gets hacked, goes under, etc.). When a product or service comes up for renewal, procurement is responsible for getting the most competitive continuation rate. Vendor management is about getting the most bang for your buck [https://www.linkedin.com/pulse/vendor-management-procurement-whats-difference-agostino-carrideo/] . For long-term contracts, this means understanding which employees are using each product or service and whether or not their expectations are met. When the product or service is not up to snuff, vendor management works with the vendor to get reimbursed for poor service or to find ways to optimize the tool’s use. Vendor management is also responsible for determining whether or not vendors are upholding security and compliance best practices and proposing potential renegotiations or cancellations based on a vendor’s quality of service. Vendor procurement and vendor management processes need to be complementary to make fulfillment efficient and effective. Benefits to proper vendor procurement and vendor management Your organization will reach a tipping point where the ROI gained from implementing vendor procurement and management policies is worth the trouble of creating them. Here are a few reasons why you should at least think about these policies sooner rather than later: * Business continuity and risk management - Imagine if your email went down, Slack no longer worked, and Salesforce wouldn’t load. That’s a bad situation, but what if it got worse. What if your product is built on multiple APIs and one of them crashed? What if you hosted client data on cloud servers that were hacked? Or, what if Shopify had a bug where customers couldn’t complete their purchases for several days? In each of these situations, you could lose time, tons of money, and customer trust. Procurement and vendor management processes can at least partially alleviate your worries by proactively analyzing security practices, reviewing SOC audits (if they have them), and scrutinizing SLAs. * Cost savings - After a big fundraise, it’s tempting to tell employees they can buy whatever they need whenever they want to. But reckless spending won’t fly past a certain number of employees and sets a bad precedent for the future. Introducing procurement and vendor management at the outset makes you frugal, buying only the products you truly need at bargain prices. Over time, you’ll become a better negotiator, and you might even make friends with your vendors. If you treat them well and send referrals their way, vendors will be more likely to offer you rebates, early access to releases, and other perks. Procurement and vendor management processes also add visibility into company spending patterns, surfacing opportunities for vendor consolidation, bundling discounts, and cash flow management [https://boringstartupstuff.com/newsletter/startup-cash-flow-manifesto]. * Projects professionalism - Most startups aim to IPO or get acquired by a large enterprise. And if you’re like most startups, you need to pay attention to your vendors. During due diligence processes, analysts will want to know why you bought certain products, who is using them, what part of your product relies on external tools, and whether you have contingency plans if something goes awry. The same line of questioning applies if you’re selling into Fortune 500 companies. Sometimes you need to prove your financial viability and dedication to security even before you schedule a demo. And it’d be a shame if you can’t get past their procurement evaluation process because of your own. Consider using a service like Safebase [https://safebase.io/] to convey the current state of your security, compliance, and procurement practices. * Increased efficiency - Startups buy tools and services to save them time. That’s why it’s critical to publish guidelines for vendor evaluation and management. Picking the right vendor and finding ways to cut costs the first time around maximizes employee mindpower without sacrificing quality. Formalizing procurement and vendor management in and of itself makes your staff more productive. They don’t have to guess what steps to take before signing a contract一it’s standardized and easy to follow. Once processes are in use, your team will find and plug gaps, making policies more streamlined as your company expands. Getting started with vendor procurement and management Vendor procurement and management don’t have to be arduous. The key is to start simple with these five tips: 1. Make a purchasing checklist - At a startup, no one has time to go through a million-step process, and not every purchase has to be approved by the CEO. So your purchasing checklist should outline the fastest way to get to a justifiable purchase. To start, nail down what employees can purchase on their own and from where [https://medium.com/@ProcureDesk/purchase-order-process-for-your-startup-complete-guide-7886284ec99d] . Create a set of preferred vendors with preferred pricing and substeps for buying hardware versus software. Next, explain how to pay. Will employees use their own card, or will you make them use a company card that gets you special billing arrangements? End with a timeline for reimbursement and steps to upload the receipt to a central repository. 2. Establish an approval process - For larger purchases, you’ll need to settle on an approval process. Will employees simply ask their boss to approve a purchase, or is there a threshold where a committee evaluates the new product? For the latter, make security, compliance, and cost criteria explicit so that employees can do their research ahead of time. Teach them to ask about SLAs, customer service hours, and anything else that may affect performance or the final price. 3. Compile a list of all vendors - It’s impossible to manage vendors you didn’t even know you worked with, so make a list. This list can be as simple as a google sheet with the name of the product, a description, the vendor’s account manager, number of internal users, and cost. In tandem, create a folder in google drive to store contracts and SOC audits. 4. Review your list regularly - Once you feel your list and folder are complete, schedule annual or bi-annual reviews. Not every product will live up to expectations [https://www.business.com/articles/procurement-tips-small-business/], so use these sessions to let users vent about each product. Did the vendor violate any contracts? Was there poor execution on a consulting or design project? Should you cancel a contract altogether or explore alternatives before the renewal period rolls around? Even if people enjoy using a product, take a moment to examine the ROI. Are you really getting the best value possible? If not, consider reducing the number of licenses or paying for a lower-tier package. 5. Use a vendor to help - Vendor procurement and management may not naturally be in your wheelhouse, and that’s ok. There are plenty of burgeoning startups [https://welpmagazine.com/27-best-procurement-startups-taking-the-industry-by-storm/] that can assist. When picking procurement and/or vendor management software, make sure it comes with reporting and analytics capabilities. Not only will this help refine your processes over time, it will also help you forecast and budget more accurately. It's Never Too Early To Establish Vendor Management Processes Vendor procurement and vendor management usually sit on the back burner. After all, it’s much more fun to think about viral marketing, product development, and hacky sales tactics. But hopefully, your company will grow faster than you anticipate, racking up expenses that make your cash burn skyrocket. Rather than paying attention to the fun stuff now and worrying about that later, think about non-disruptive ways to evaluate vendors and track their use today. Because saving money now is like starting to invest when you’re 20 years old一the dividends will pay off [https://www.scmsp.com/RafaelMarreroWhite%20paper-SpotswoodConsulting.pdf].
Finance
The Cash Flow Manifesto
Daniel Jakaitis / 4 months

The Cash Flow Manifesto

Cash is the lifeblood of an early-stage startup. Improperly managed cash flow will take down a startup before it's had the chance to grow. Don’t assume that your team will be able to raise another round if the bank account runs dry. An optimized cash flow management process from the outset will prevent you from ending up in the startup graveyard [https://startupgraveyard.io/]. Here is our cash flow manifesto. Establish Spending Habits Early On * In the early days, spending should be formally reviewed weekly. This process can be moved to a monthly reconciliation process once the business has established consistent revenue and operating expenses. But in the early days, this meeting will emphasize how important cash is to the business. * Until your revenue and operating expenses are growing in predictable tandem, rely on zero-based budgeting. Zero-based budgeting is a method by which all expenses need justification before cash will be allocated. * Use corporate spend management tools like Brex [https://www.brex.com/] or Divvy [https://getdivvy.com/]. * Clearly communicate corporate policy in easily accessible, readable documents. Ensure all employees understand what, and how, things are to be paid for during ordinary business. Automate Accounts Receivable * While accounts receivable (AR) are technically considered an asset on the balance sheet, they are a potential point of cash flow risk for a company. Automate follow ups on all outstanding invoices and provide clear ways to receive payments. Depending on the market you sell into, consider simple payment processing via Stripe [https://stripe.com/]. * Negative cash conversion cycles can act as a cash flow flywheel. Cash conversion cycles represent the time between when an invoice for a service or good is paid and the time required to pay for providing such service. In other words, negative cash conversion cycles imply you are able to keep cash on the books for a longer period of time. This is a good thing and will allow you to re-invest cash sitting on your balance sheet before having to send it out to a vendor. * Avoid perpetual discounting when possible. It is a good idea to offer early customers and partners discounts in exchange for working with your new company, but avoid overbearing language that might lead to a long-term drag on your top line. Oftentimes startups feel they lack the leverage to raise prices, but in reality, customers willing to pay $1 dollar will generally be willing to pay $2. Keep discounted contract periods to brief and clear timelines and set a standard of raising prices annually. Be Tactical About Accounts Payable * Accounts payable (AP), often considered a liability, can also be a boon for a startup if managed properly. When negotiating with vendors, ask for payment terms as far out as possible. As a general rule, you never want to be paying anything sooner than Net 30 (30 days from invoice date) and you certainly do not want to be paying COD (cash on delivery). Personally, I always seek a minimum of Net 45 terms and occasionally push my luck by requesting Net 90 or Net 120. * Request invoices for all services rendered or purchased when available. This may not always be available, but don’t shy away from asking for special treatment from a vendor. Build Cash Reserves * If you are raising a round, allocate 3 months of burn (Payroll + Rent + OpEx) to your balance sheet for a rainy day. * Forecasting cash flow works up to a point. To be of any value, modeling future cash flow must account for different scenarios. * Seek being default alive [http://www.paulgraham.com/aord.html]. This does not need to mean running at profitability. It simply implies you should focus on keeping burn rate low enough to last you in the order of years and not months. Get Professional Help * Try working with a bookkeeper from day one. Companies like Bench [https://bench.co/] and Pilot [https://pilot.com/] can be great stand-ins before you are ready to make a full-time hire. At the very least, rely on bookkeepers to provide you with a cash flow analysis monthly. * Spend time educating yourself on the three financial statements [https://corporatefinanceinstitute.com/resources/knowledge/accounting/three-financial-statements/] and accounting basics. As a resource, I strongly recommend the courses available at A Simple Model. [https://www.asimplemodel.com/] While outsourcing some work can be beneficial, at the end of the day, the leadership team of the startup (specifically the CEO and CFO) is responsible for the financial well-being of your company. Do not assume your accountant or bookkeeper is taking care of everything or you will find yourself in very dangerous waters. Build process from day one around managing cash flows. Set a weekly meeting to review your P&L, implement corporate spending policies, and automate where possible. Invest in financial literacy immediately, it will pay dividends. Don’t forget that cash is king.
Growth
Product-Led Growth: What Is It and How Do You Do It?
Liz Melton / 4 months

Product-Led Growth: What Is It and How Do You Do It?

Product-led growth, or PLG, sounds self-explanatory. Your product evolves over time, and growth follows, right? If you’ve ever worked at a startup, you know getting the PLG flywheel started is not that simple. The term product-led growth has a lot more to it than just product and growth. For those that adopt it, the PLG framework becomes a central part of company strategy, affecting the behavior of nearly every department. PLG is so powerful that it’s turned several small startups into behemoths like Dropbox [https://growthhackers.com/articles/going-viral-how-dropbox-used-product-led-growth-strategy-to-hit-10b-in-10-years] and Shopify [https://venturedesktop.substack.com/p/the-rise-of-product-led-growth]. So what does this nebulous term mean, and how can it boost your growth? Below, we’ll define product-led growth, explain how to structure your startup with PLG in mind, and share a few examples of companies that used PLG to achieve unicorn status [https://www.mehtaphysical.com/6-things-i-learned-about-plg-and-customer-success/] . What is Product-Led Growth? Product-led growth is an approach to expansion that’s focused on delivering an exceptional end-user experience [https://openviewpartners.com/blog/what-is-product-led-growth/#.YJ069fdHYlQ].  You need an incredible product—so unbelievable that users can’t stop using or talking about it with their colleagues, friends, and family. For PLG to work, your product itself needs to drive user acquisition and conversion. Take Zoom, for instance. While they had a unique advantage during COVID-19, there was already a surge in Zoom use before the pandemic, and much of it had to do with PLG. Zoom addresses a need every company has: communication. While there are other communication tools out there, Zoom took what those platforms did and made the user experience way better. Zoom is free, quick to download, and has an intuitive UI. People who were frustrated with their companies’ sanctioned conferencing software tried Zoom and ended up loving it, using it with internal and external colleagues一even at home. Eventually, employees ran up against the 40-minute mark, prompting them to ask their IT teams to buy an enterprise version. Zoom became a critical aspect of users’ daily lives, and at that point, procurement had no other choice but to purchase it. Rather than catering to IT departments themselves, Zoom thought hard about what the end-user wanted in a teleconferencing platform and delivered. Benefits to Product-Led Growth as a Strategy Ok, so we’ve mentioned Shopify, Dropbox, and Zoom as hallmark PLG companies, but are they just a fluke? What does the average company get out of using PLG as a strategy? Here are just a few of the main benefits to PLG: * Hypergrowth Post Product-Market Fit - OpenView Partners is a VC firm known for its commitment to PLG companies. Every year, they publish a report with insights, benchmarks, and advice from top-performing SaaS companies. The 2020 SaaS Product Benchmarks Report [https://openviewpartners.com/productbenchmarks/] found that product-led businesses grow much faster at scale. The early days may be tough going, but once customers start to convert, revenue dramatically accelerates, particularly after hitting $10M in ARR. * Lower CAC - PLG companies traditionally have a freemium model, making acquisition much easier and therefore cheaper. Offering free trials at the top of the funnel hooks people in, and additional non-negotiable features (i.e., Zooms that last past 40 minutes) make converting to a paid plan a no-brainer. The best part is that money that would typically be dedicated to marketing can go towards product development. * Smoother Upsells - For B2B companies, user acquisition has a ton of power. If you can acquire a bunch of employee users at little to no cost, you’re very likely to turn that into a large-scale contract. And if your product continues to please end-users and you launch even more unbeatable features in your upgrade plans, upsells will be a breeze. Many PLG companies charge per user, meaning that as your clients grow, your contracts will grow. * Happier Customers - A relentless focus on product all but guarantees low churn rates. Besides the product itself, PLG places emphasis on an effortless onboarding experience, great content, and fantastic customer support. People who love your product and have good encounters with your CSMs will ask for upgrades and even provide valuable feedback for your product roadmap. Last but not least, happy customers are the ultimate marketing tool. Word-of-mouth can go a long way. What Does Product-Led Growth Look Like in Practice? In PLG, paying attention to the product isn’t relegated to the product team alone. A true product-led company ties product into everyday operations, uniquely influencing product, sales, customer success, and marketing teams’ work. Let’s take a look at how: The Role of Product in Product-Led Growth The fact that “product” is the first word in product-led growth is a dead giveaway that it’s the central component of PLG. On the front-end, product teams should be talking to users regularly, anticipating pain points before they arise, and getting context around feature requests. On the back-end, product teams should be laser-focused on getting engineering to fix all end-user-reported bugs and removing as much tech debt that’s not contributing to user needs as possible. Limiting tech debt will pay off big time as PLG companies scale. Above all, product teams should constantly be looking for new ways to deliver value. The Role of Marketing in Product-Led Growth The PLG marketer’s goal is to create “viral loops” in which end-users rave about and share the product endlessly [https://thepathforward.io/how-use-product-loops-supercharge-your-startup/]. It’s vital that early PLG marketing teams are excellent copywriters, brainstorming headlines that urge users to make the first download. If marketers can get users to sign up, the product speaks for itself, acting as a lead magnet. PLG marketing teams rely on product data to improve their communication style and nurture campaigns, ensuring that their messaging is speaking to end-user needs. The Role of Customer Success in Product-Led Growth Customer success teams bring a lot to the PLG table. Their job is to make users successful at using the product without much help [https://www.trychameleon.com/blog/product-led-growth]. CSMs might create step-by-step walkthroughs, host webinars, or even contribute to blog posts in an effort to make onboarding a seamless experience and to make sure users are getting the most out of new features. As more and more enterprise-level companies show interest in the product, there is bound to be an uptick in complex use cases and integrations. Customer success teams address those issues and feed the input from these conversations back to the product team. The Role of Sales in Product-Led Growth When you think of sales teams at most tech organizations today, you think about a top-down approach. Sales reps sleuth around on LinkedIn to find, contact, and meet executives until they convince buyers to purchase a certain number of seats. Rather than going in at the top, PLG sales reps will primarily serve一you guessed it一the end-user. Reps use the product to qualify prospects for them [https://visible.vc/blog/product-led-growth/]. They pay attention to how leads are using the product, demoing how the paid version of the product can fit the leads’ needs even better. Instead of just talking about future value like a traditional SaaS salesperson, PLG sales reps drive conversion by actually showing it [https://userpilot.com/blog/product-led-growth-marketing/]. Oftentimes, sales reps are the last hires at a PLG organization. Other Pieces of the Product-Led Growth Puzzle Besides revamping the way your product, sales, customer success, and marketing teams work, there are three other things PLG companies keep front and center. They are: 1. Virality - If you look at product-led companies, you’ll notice one thing: they hit a point of hypergrowth. Take Calendly, for example. When you first saw a colleague or friend using it, you might’ve immediately signed up, or at least Google searched what it was. Think about that behavior on a larger scale. Once a few people caught on to Calendly, it spread like wildfire. Word-of-mouth helped, too; everyone talked about how much Calendly alleviated the ridiculous amount of time it took to book meetings. PLG companies have a product that naturally encourages virality. 2. Minimizing Friction - PLG products should be cheap (basically free), frictionless, and easy to learn [https://sujanpatel.com/saas/product-led-growth/]. As a user, you should sign up and start using the product in no time. Think of using SSO or other ways to simplify profile setup, like asking only for Name and Email. Using the product should be intuitive, too. Within the first few minutes of using the tool, it should be obvious how your product solves end-user problems. To help with this, you’ll see PLG companies inserting help text, adding pop-ups, or sending users links to resources to turn end-users into power users. The ultimate goal is to enable users to discover the product’s value on their own. 3. Maximizing Value (Quickly) - People have a limited attention span and a minimal amount of time and patience. Your tool needs to put value front and center to keep users engaged, delivering value quickly and efficiently. PLG companies also tease what’s available in the paid version to give end-users an idea of what they can achieve once they graduate from freemium. People are much more inclined to spend money if they see the value. And because PLG companies rely on count on viral loops to succeed, it’s even more critical to maximize value ASAP. Examples of Product-Led Growth Companies There are a few B2B companies that everyone always cites when it comes to PLG, namely, Slack, Calendly, and Atlassian. Although those are extremely successful and popular, we wanted to showcase other PLG companies that are crushing it: Discord [https://discord.com/] - If you’re at all into games, you’ve heard of Discord. It’s a platform that enables users to communicate with voice calls, video calls, text messaging, and files in group or private chats. Discord came about because many people like chatting with friends while playing video games, but the methods of doing so (Skype, TeamSpeak) were terrible. Discord saw this as an opportunity, creating a superior voice chat app and going to market with the tagline, "It's time to ditch Skype and TeamSpeak." In 2015, someone posted about Discord in a Final Fantasy subreddit and got about a hundred users really interested in the product. With a little creative marketing and continuous product iteration, Discord grew to over 150M users worldwide. While Discord is still relatively small-time, they caught big tech’s attention一Microsoft was thinking about acquiring them [https://www.theverge.com/2021/3/26/22352028/microsoft-discord-acquisition-analysis-report] earlier this year. Xero [https://www.xero.com/] - Xero is probably on your radar if you’re an accountant for a small to medium-sized business. It’s now publicly listed on the Australian stock exchange but started as a way for companies to move their accounting to the cloud. The founder, Rod Drury, knew that desktop accounting software was ineffective and frustrating to use, so he reached out to bookkeepers and accountants directly, selling them on his product’s sleek UI and time-saving capabilities. After a while, he established a dedicated group of partners who advised him on new integrations and features to build─a program that still exists today [https://www.xero.com/au/partner-programs/partners/partner-program/]. In 2021, Xero boasts over 2M users [https://www.xero.com/us/about/] with a market cap of roughly $16.7B [https://finance.yahoo.com/quote/XRO.AX/]. We’ve concentrated on PLG in B2B companies, but it’s worth mentioning that many B2C companies such as Bumble, Pinterest, and Venmo were already doing PLG before it was even a “thing.” Product-Led Growth for Startups Product-led growth doesn’t happen overnight. While it can seem like PLG companies that went viral got lucky, these businesses put in hours and hours of effort upfront before attracting the attention of their user base. And, of course, you need a stellar product. You can throw yourself into PLG and try all the hacks you want, but none of that matters if your product isn’t excellent. A product-led growth strategy isn’t for the faint of heart. It requires dedication to product in every aspect of your business, but the rapid growth, low cash burn, and diehard fans can really pay off. With product-led growth, you have the potential to become the next Github, DocuSign, or ZipRecruiter of the world.
Finance
Investor Relations For Startup Founders
Daniel Jakaitis / 4 months

Investor Relations For Startup Founders

Since 2017, the median seed funding for a new startup has risen by over 30% to $2.2 million [https://medium.com/the-mission/state-of-seed-investing-in-2018-25eb28ac0e93]. Whether you are flush with VC cash, or raised from family and friends, at some point you are going to need to tell your investors about your progress. If you have not been communicating to the individuals on your capitalization table [https://www.investopedia.com/terms/c/capitalization-table.asp] (cap table) at least quarterly, they are likely already sending you emails requesting updates. Investor relations (IR) is critical to the long term success of a startup. Not only does IR signal to your current investors that you are a good steward of their money, it also buys goodwill that can potentially be useful for later funding rounds. Even if you never go on to raise additional funds, setting a healthy IR cadence up early on will force your startup team to evaluate metrics and pinpoint areas of concern before they become bigger issues. Most startups send a monthly or quarterly email, but let’s examine how some startups are handling investor relations today. How do startups deal with investor updates? At NYC-based recruiting tech startup, Recruitifi [https://www.recruitifi.com/], the IR process is a team sport. Recruitifi’s CEO, Justin Luciani, works closely with his COO to draft the quarterly IR letter, which dtypically involves highlights such as new product features or changes to prospective pipeline deals. Once they complete a first draft, they lean on department heads across the company to fill in the blanks  with itemized metrics. Before the C-suite sends the letter, they ask department heads for feedback. While quarterly updates work for some teams, others find their investors are more content with a monthly update. CEO & Founder, Ben Mackinnon, spent early years at Kard [https://www.getkard.com/] writing quarterly updates only to be hit with dozens of ad hoc requests from investors and advisors. In the past year, he moved this process to a monthly cadence, containing only  four core company KPIs. Ben saves even more time by creating a standard Mailchimp template, and then pulls data automatically from reporting dashboards every month. One of the most important factors for successful IR is consistency and cadence. Ian Roncoroni, CEO of Next Caller [https://nextcaller.com/], notes, “[Ii]t can be tempting to wait until you hit certain milestones before sending out an update, because you always want to have good news to share.  But, as milestones and projects often get delayed, this can be a slippery slope that causes massive delays in getting out updates, which can frustrate investors.” What information should be included in your investor updates? Most investors want to see the numbers. While color commentary on what has gone on in the recent period is important, it’s best to focus the IR update on 4 to 5 primary KPIs that move the needle forward for your company. Kard focuses heavily on GMV [https://en.wikipedia.org/wiki/Gross_merchandise_volume], gross revenue, burn rate, and user counts. While GMV is valuable for a marketplace-oriented startup such as Kard, other companies may be tracking things like employee attrition and sales pipeline movement. Building in public and the rise of hyper-transparent startups [https://thehustle.co/07312020-transparent-startups/] has changed the dynamics of who sees company updates. Historically, IR updates were exclusively for the eyes of investors and advisors on the cap table, but today many companies have peeled back the curtain to company employees and outsiders. While many founders do not include employees in their updates, at Next Caller, Ian believes that “treating employees like adults and being candid...builds a tremendous amount of trust and confidence,” enough to outweigh any risks. “Don't be shy to share bad news, as your investors want you to succeed and can hopefully help you in tough situations,” Mackinnon says. Investor updates shouldn’t obscure what is going on at the company. Use these letters as an opportunity to seek advice from your supporters. What are some tools and tips for building a robust IR process? Email automation platforms like Mailchimp [https://mailchimp.com/] are a must to help manage your investor contact lists and maintain email templates. When it comes to presenting your data, you can choose to put numbers right into the body of the email or , attach a PDF. Crafting emails by hand can get messy, but may make sense if you intend to send bespoke messages to different segments of the cap table. Keeping information confidential to the trusted circle of investors and employees can be nerve wracking. It is recommended to watermark your documents that are sent outbound using a tool like DocSend [https://www.docsend.com/]. With DocSend, you can track who has opened or forwarded the document. While this helps, it is not a silver bullet. “Assume everything you send to your investors will get forwarded on to people [who] you don't want to see it,” advises Roncoroni. Kard relies on a series of dashboards and automated reports generated directly from their backend databases. Setting this up from the beginning will pay massive dividends—both for Investor relations and internal monitoring. You should not need any expensive BI tools to accomplish this - see if your current database vendor offers reporting tools out of the box like MongoDB Charts [https://www.mongodb.com/products/charts]. For those using relational databases, we recommend starting with simple tools like Redash [https://redash.io/]. SaaS companies that rely on automated billing platforms like Stripe or Chargebee can also benefit from tools such as Profitwell [https://www.profitwell.com/]. Profitwell offers up easy reporting on top of these payment platforms to easily dump aggregated datasets that include churn metrics, ARPU, gross profits and much more. Good Investor Relations can be the key to future growth Keep your cap table “clean”. The fewer, more professional investors on your cap table generally leads to a simpler investor relations process. You don’t want to chase down hundreds of investors for signatures when it comes time to sell your business. Similarly, you don’t want to be answering detailed questions late into the night from the dozens of investors that wrote you $5,000 checks. Avoid party rounds [https://blog.samaltman.com/party-rounds], and aim for bigger checks early to reduce the number of hands in the pot. Lastly, be proactive. Do not wait for requests for information from your board or cap table members. “Regular communications will keep you front of mind with your investors. When they hear of talented people looking for new jobs, or new investors looking to deploy capital, or anything that could be helpful, they'll think of you and reach out, ” Roncoroni says. Consistent updates lead to trust, and trust is what builds the foundation of strong relationships.
Deep Dive
A Startup Guide to SOC 2
Liz Melton / 4 months

A Startup Guide to SOC 2

According to IBM, data breaches cost US companies $8.19 million on average [https://digitalguardian.com/blog/whats-cost-data-breach-2019]. Sadly, this number is only growing. GovTech magazine found that the total number of records compromised in 2020 exceeded 37 billion, a whopping 141% increase from 2019 [https://www.govtech.com/blogs/lohrmann-on-cybersecurity/2020-data-breaches-point-to-cybersecurity-trends-for-2021.html] . Scary, huh? But guess who is even more scared about a data breach than you? Your clients. Convincing them the data you’re storing for them is safe and sound is hard to do. Just saying you’ve never had a breach in the past doesn’t persuade them that one won’t happen in the future. Luckily, there’s a (laborious, lengthy) certification that can help: SOC 2. If you’ve ever worked at a SaaS company, you’ve probably heard someone on your engineering or compliance team talk about SOC 2, but you may not know what it is, where it came from, why your company needs it, or how to prepare for an audit. We’re going to provide a brief history of SOC 2, explain the criteria for passing a SOC 2 audit, and showcase a few vendors guiding companies through successful audits. A bit of SOC 2 history At their core, audits assess companies’ controls and procedures to protect their employees and their customers from fraud. By controls, we mean rules or methods that safeguard information, such as two-factor authentication, password protection services, employee offboarding checklists, and even physical key cards. Back in the 90s and the early 2000s, audits focused mainly on internal financial controls (remember Enron?). But now, companies are increasingly relying on third-party cloud-based services and have more access to customer data than ever before. As a result, The American Institute of Certified Public Accountants (AICPA) began to think about information security more generally [https://www.blissfully.com/guides/soc-2-compliance/], formulating reports to help organizations communicate their security practices to potential clients. And so, in 2011, Service Organization Control (SOC) reports were born. The three SOC reports一SOC 1, SOC 2, and SOC 3一differ in scope and purpose. SOC 1 is for evaluating financial controls, and SOC 2 is for evaluating operational or compliance controls. Both of these reports can only be viewed by the organization that obtained them and their customers. SOC 3, on the other hand, is meant for public use and is essentially a more condensed version of SOC 2. But what is SOC 2, really? SOC 2 is a framework that validates an organization’s internal data center controls and other security-related operations that preserve client privacy. While that sounds simple in theory, it’s much more complex in practice. SOC 2 reports can be hundreds of pages long, with information around engineering processes, how long certain data is stored and where, employee job descriptions, onboarding practices, emergency plans, and more. And because the audit isn’t a series of pass/fail tests, and because not all companies do business the same way, SOC 2 reports will be unique to every company. The 5 “Trust Service Principles” Now, you can’t just say you follow SOC 2 procedure and publish your own report. If only it were that easy! SOC 2 certifications are issued by external auditors who judge how well your company adheres to one or more of the five Trust Services Principles. They are: 1. Security - Security is the minimum requirement for a SOC 2 audit [https://info.cgcompliance.com/blog/what-is-soc-2] and pertains to protection against software misuse, removal of/alteration of/disclosure of confidential data, or any other system abuse. Auditors will ask for proof of network firewalls, intrusion detection, and other methods of preventing unauthorized access. If you’re doing an audit for the first time, most auditors will recommend focusing on Security only. 1. Availability - Availability proves how accessible your system is. In layman’s terms, this means your software works when it’s supposed to. You have service level agreements (SLA) in place that stipulate how long it should take to fix errors, you monitor network performance, and you have outlined the steps to take when security incidents occur. 1. Processing integrity - This principle asks you to prove that your system processes data the way you say it does. Auditors determine whether your data processes are valid, complete, and accurate and look deeply at your methods of data monitoring and QA. 1. Confidentiality - Keeping data confidential is of utmost importance to your clients, so auditors ensure that data access is restricted to a particular set of people. Auditors will verify that you have email encryption and application firewalls and educate your employees on confidentiality best practices. Examples of confidential data could be employee records, strategy plans, IP, SKU lists, or financial documents. 1. Privacy - The AICPA has Generally Accepted Privacy Principles (GAPP) that govern SOC 2 Privacy. As you might expect, GAPP includes personally identifiable information (PII) like name and SSN but also encompasses personal data about race, sexuality, religion, and health. When auditors examine this principle, they expect an extra level of protection around PII with policies around the use, retention, disposal, collection, and disclosure of sensitive data. Do startups need SOC 2? Now that you know what SOC 2 is, it’s time to determine whether or not you need it. Many people tend to put off audits since the entire process can take six months to a year. But depending on what your company is doing and selling, that could be a big mistake. First, ask yourself if your company deals with sensitive health or banking information. If the answer is yes, you probably need to pass a SOC 2 audit. Simple as that. Even if you aren’t working in healthcare or financial services, SOC 2 is often a critical component of enterprise decision-making [https://www.imperva.com/learn/data-security/soc-2-compliance/]. If you’re hosting any customer data on the cloud, chances are prospects will immediately look for a SOC 2 certification. Large organizations have whole information security departments whose job it is to evaluate your company’s ability to protect their data. A SOC 2 preparation checklist Let’s say you are hoping to start the SOC 2 audit process next year. Now is the time to get your ducks in a row so that you have time to address any gaps before engaging with an auditing firm (who will, inevitably, find more gaps). When preparing, it helps to gather information in a few buckets: Your baseline environment - How does your company operate on a day-to-day basis? Do you enforce certain employee behaviors? Some things to start collecting are: * A list of all employees, their roles, and their job descriptions * Background check reports * Signed copies of Codes of Conduct * Org charts * Board meeting minutes * Instances of non-compliance Communications - How do you inform your employees and clients of security updates and changes to your product and internal systems? Begin assembling: * A list of all internal systems your company uses * Employee security training modules * An incident response policy * Customer agreements (MSAs, SLAs) * Release schedule(s) Risk, monitoring, and availability - How does your company assess and handle risk? This one is super important and can be one of the longer aspects of evidence gathering. Gather the following docs: * A Risk Treatment Plan and Risk Assessment Procedures * A list of monitoring software * Vulnerability scan reports * Annual Pen test reports * Incident management ticket samples and documentation * Root cause analysis samples * A list of all previous security incidents * Capacity monitoring reports * Employee termination checklist * Proof of full disk encryption on employee laptops * Intrusion Detection Service and Production Firewall reports * Copies of your internal employee directory (LDAP, Google Workspaces etc.) * Proof of Business Continuity and IT Disaster Recovery Programs * All third-party vendor agreements in a vendor management program, along with a list of all the admins of those tools Confidentiality - How does your company manage sensitive data? Show that you have: * A Data Retention Policy * A Data Classification Policy * A Data Disposal Policy * A way to train employees on sensitive data * Evidence of customer contracts with sections related to the treatment of confidential data A SOC 2 marketplace ready to help As you might imagine, many people have put significant time and effort into making this arduous process simpler. Thankfully, they’ve been working on this problem for a while, so there’s a marketplace for SOC 2 readiness software and a suite of compliance auditors to choose from. Here are just a few go-to’s: For preparation: * Secureframe [https://secureframe.com/products/soc-2]: Secureframe is a compliance automation software that boils down the complicated SOC 2 audit process into seven key steps. They’ve saved their customers hours upon hours of tedious busywork all while delivering best-in-class security. Even after their clients achieve the holy grail of SOC 2, Secureframe provides ongoing compliance monitoring to maintain their certification. Plus, it’s a Series A startup co-founded by a woman一we love to see it. * Vanta [https://www.vanta.com/products/soc-2]: The Vanta platform prepares companies for SOC 2 audits with read-only integrations to the most popular cloud services, identity providers, and task trackers to feed directly into your evidence gathering. Post-certification, Vanta runs checks on your company’s systems every hour to guarantee compliance over time. For auditing: * Armanino [https://www.armaninollp.com/]: Armanino LLP is one of the 25 largest accounting and business consulting firms in the US and works directly with Tugboat Logic’s Security Assurance Platform to provide an integrated security audit process. With the help of experienced consultants and Tugboat’s integration capabilities, Armanino can give organizations the feedback they need to efficiently and independently obtain the SOC 2 certification. * A-LIGN [https://a-lign.com/]: A-LIGN is a cybersecurity and compliance firm that specializes in SOC 2 audits. Their testing is based on AICPA regulations and is performed by seasoned assessors. A-LIGN was the first CPA firm to provide IT audits and has over 20 years of SOC experience. Adopt a SOC 2 mindset These days, Fortune 500 companies will simply shoot down the sales process outright if you don’t have a SOC 2 cert. And if we’re being honest, the process to get SOC2 compliant basically starts on day one. Set up your infrastructure with SOC 2 in mind, paying close attention to the five trust principles. The more you do this now, the better, since audit preparation services tack on extra costs to the $25,000 - $50,000 you’ll spend on the whole process. When it comes time to do a formal audit, you’ll want to have most of the pieces to this complex puzzle.
Deep Dive
When Robots Have Feelings
Daniel Jakaitis / 4 months

When Robots Have Feelings

Before a company makes its first full-time HR hire, there’s an awkward gap without any one person owning onboarding, feedback systems, company culture, or the many other aspects of employee experience. In the interim, these tasks tend to fall to operations, so I’ve been thinking about how to run them more efficiently. They’re not easy to delegate [https://boringstartupstuff.com/newsletter/how-to-delegate-in-your-startup] and they shouldn’t be ignored, so software seems like the next best solution. We’ve covered PEOs [https://boringstartupstuff.com/newsletter/feb-9th-2021-perfecting-your-peo], which do a great job of automating payroll, benefits, and more company infrastructure-related items. But what about the other parts of People Operations? The Space Is Hot It seems that I haven’t been alone in this desire for efficiency, as a new batch of companies has popped up to fill the demand for “people-ops-as-a-service.” Between cold emails, LinkedIn outreach, and even responses to this newsletter (thanks, Quidli [https://quid.li/]!), signs show that founders are taking advantage of the new remote-first world to rethink personal interactions and push the boundaries of what can be automated [https://www.shrm.org/hr-today/news/hr-magazine/spring2019/Pages/hr-needs-to-stay-ahead-of-automation.aspx] . Grow [https://getgrow.io/], for instance, started from a desire for easier feedback in the workplace. By using their templates as a jumping-off point when giving feedback, employees are more likely to share their thoughts, both good and bad, with one another, leading to lower turnover and higher satisfaction [https://news.gallup.com/businessjournal/814/taking-feedback-bottom-line.aspx]. Employees are still writing the content of the feedback themselves, but the Grow frameworks ensure best practices without needing to train the team. Enhancing some of these less tangible aspects of employee experience over to software means that there are additional opportunities for analysis. Grow found that companies touted as having the best culture are more likely to request feedback [https://membership.neuroleadership.com/material/getting-culture-feedback-science-based-strategy-improve-performance-scale/] from one another, reply to feedback after it is given, and share feedback [https://www.amazon.com/dp/B081Y3R657] for accountability. Monitoring these metrics over time through a platform gives clear measurements of your culture to help you understand what is going well and where there are opportunities for improvement. When To Automate HR The best time to spend time automating is right before a spike in hiring. The more people you throw at processes, the more likely they are to break, so thinking about scalability early may delay the inevitable a little longer. Team size or company stage may be less important than attitude toward automation and time allocated. Gather [https://www.teamgather.co/], an agile team creating people operations workflows [https://www.teamgather.co/people-operations-playbook] (think work anniversary reminders and onboarding buddies), is specifically built for teams who are “eager to build the right foundations but don't have the resources to do it well.” Cofounder, Alex Hilleary [https://www.linkedin.com/in/alex-hilleary/], said of their process: > All along the way, we keep a very operational mindset, helping folks think about scalability and the long run. We love to ask, ‘Sure, this onboarding program works for you as a 20-person team, but will it still be a base program you can iterate on as a team of 100, or will it completely fall apart in 2 years?’ Notice when you are beginning to repeat processes and use those as the starting point [https://www.inc.com/jeff-haden/how-to-automate-your-business.html] for what to automate. Onboarding is a common focus because it’s extremely telling of your company culture [https://readwrite.com/2020/10/19/the-key-to-scaling-company-culture-is-automating-employee-onboarding/] and every new employee will experience it. The point should not be to eliminate tasks, rather to make more comprehensive and repeatable processes. When Not to Automate When Facebook first offered the option to automatically post birthday wishes on a friend’s wall, I wondered what the point of the gesture would become. Was it somehow more meaningful to me if the friend typed out the message versus clicking a button to have Facebook generate the post? The answer was a yes, even if the end result was the same. Ryan Sydnor [https://www.linkedin.com/in/ryansydnor/], Cofounder at Grow [http://getgrow.io/], agreed that automation can help people transform into more ideal versions of themselves by not forgetting important birthdays or opportunities to share feedback. However, too much automation can come at the cost of making things impersonal. Empathy goes a long way [https://www.asaporg.com/the-value-of-empathy-in-the-workplace] in creating the bonds needed to create a productive work environment, so more vulnerable moments, such as hiring or firing, still need a human touch. The Future of People Operations So what does the future of automating People Operations look like? Christina Rosivack [https://www.linkedin.com/in/christina-rosivack/], Director of Customer Success at Ethena [https://www.goethena.com/] — a company tackling harassment prevention training — predicts continued growth in tech giving early-stage companies access to benefits previously reserved for larger, more developed organizations. She went on to add: > Employee experience and the creation of a positive workplace are top of mind across startups, and gone are the days when a ping pong table and free snacks pass muster. There’s a greater desire for benefits that align with personal values [https://www.forbes.com/sites/kaytiezimmerman/2017/10/01/5-things-we-know-millennials-want-from-a-job/?sh=509a0d0d7809] , but the overhead of these tools can be exorbitant for a small team. Tools bridging this gap help companies better retain top talent. In the end, these products can only take the input we give them. Someone has to decide that the product is a good fit. Someone has to decide the tool is worth the expense. Someone has to think through the steps that go into the onboarding checklist, decide the mile markers to celebrate, and plug in the information. Even in an automation-friendly culture [https://www.itproportal.com/features/five-ways-to-create-an-automation-friendly-culture/] , a human will always be in the loop to design the process [https://www.linkedin.com/posts/johnwetzel2_gather-design-your-company-culture-activity-6785539641429807105-h0Pv/] . Automation may just help us remember what we decide matters. Focus on getting the culture right [https://boringstartupstuff.com/newsletter/feb-16th-2021-creating-company-culture] and let the machines take it from there.
Deep Dive
Why It’s Not Too Early to Think About CSR
Liz Melton / 4 months

Why It’s Not Too Early to Think About CSR

Fortune 500 companies spend $20 billion on Corporate Social Responsibility (CSR) efforts collectively [https://econreview.berkeley.edu/stocks-sustainability-how-they-relate/], equating to 0.1% of total revenues and 1.8% of total profits. Even without the massive budgets of large organizations, startups can make an impact by adopting CSR policies. Building a vision beyond the bottom line is what separates the good from the great companies 一 CSR provides a framework for your startup to make a bigger impact. Because of this ginormous number, a common misconception is that only rich companies can afford to make CSR a priority. But your contributions don’t have to be grandiose. Your CSR program can have humble beginnings [https://www.business.com/articles/can-you-make-a-profit-and-be-socially-responsible/] : offering employees a day off every quarter to volunteer at a community center, reducing your carbon footprint by going remote, or pledging a tiny share of proceeds to a non-profit that matches your startup’s mission. Startups are prime candidates for CSR [https://sociable.co/technology/why-startups-should-embrace-csr-initiatives-from-day-one/] . Because as they grow, so too can their positive contributions to society. And beyond making the world a better place一a noble effort in and of itself一CSR programs strengthen culture, lure in customers, retain talent, support public image, and attract investors. In this piece, we’ll define CSR and why VCs care and discuss the many ways your startup can benefit from it. What is CSR? Corporate Social Responsibility (CSR), is a business framework that keeps organizations accountable for their impact on society. In other words, companies use CSR practices to minimize their negative influence on social, environmental, and economic causes一often called the “triple bottom line.” [https://www.unido.org/our-focus/advancing-economic-competitiveness/competitive-trade-capacities-and-corporate-responsibility/corporate-social-responsibility-market-integration/what-csr] There isn’t one way to practice CSR, but businesses that go this route often report on their positive contributions to society and are judged on their performance by their stakeholders and the public. This pays dividends in the form of PR, recruiting, and corporate culture. Since CSR doesn’t confine companies to a particular cause, companies can choose what they want to focus on and how they choose to participate. Companies often tie the causes they support to their values. If a startup is in the activewear business, perhaps it donates a portion of its profits to a non-profit such as Play Like a Girl [https://www.iplaylikeagirl.org/]. If a startup is connected to restaurants, employees may volunteer at a local food bank once a month. Probably the most woke company in terms of CSR is Ben and Jerry’s. They put corporate responsibility at the center of their strategy [https://www.benjerry.com/values], formally reporting on social responsibility when they had fewer than 1,000 employees [https://danielsethics.mgt.unm.edu/pdf/ben-and-jerry-case-.pdf]. Now, CSR is simply part of the Ben and Jerry’s brand. Besides speaking out against racial injustices last summer [https://www.benjerry.com/about-us/media-center/dismantle-white-supremacy], Ben and Jerry’s has partnered with the International Rescue Committee, only uses fair-trade, GMO-free ingredients in their products, and funds a dairy sustainability program near their headquarters in Vermont. Today, Ben and Jerry’s is a global brand owned by Unilever [https://ssir.org/articles/entry/the_truth_about_ben_and_jerrys]. They can afford to put money and time into these activities. So how can startups make CSR tenable? Part of the answer lies with committed investors. Investors care about corporate social responsibility VCs, philanthropists, and angel investors increasingly want to make a difference in the world. ESG (Environmental, Social, and Governance) investors, for instance, devoted $715 billion worth of assets in April 2020 [https://www.barrons.com/articles/impact-investing-market-expands-to-715-billion-survey-says-51591873206] , a 42.4% increase from 2019. There are also plenty of impact-focused accelerators [https://sociable.co/technology/why-startups-should-embrace-csr-initiatives-from-day-one/] , including The Social Impact Accelerator (SIA) in Europe and The Social Enterprise Alliance in the United States. Even investors who don’t invest exclusively in CSR-focused companies might include social responsibility as one aspect of their thesis. They’ve likely seen the value CSR-led companies can bring to consumers and shareholders, and want to get in on that action early. Sincerely positioning your startup as one that cares deeply about CSR can give you access to funding you may not have known existed. And with extra capital, you can do more things for your business, your employees, and your community. Socially responsible startups do better in the long run There are endless benefits to incorporating CSR into your startup strategy, particularly when you have to keep it lean. Below are just a few ways CSR can help your business while helping society. * Higher margins - In recent years, shopping responsibly has skyrocketed in popularity. A 2019 Nielson report [https://www.nielsen.com/wp-content/uploads/sites/3/2019/04/Global20Sustainability20Report_October202015.pdf] found that sales of consumer goods from brands with a demonstrated commitment to sustainability have grown more than 4% globally, while those without grew less than 1%. * Pricing power - What is more, 66% of customers [https://www.inc.com/melanie-curtin/73-percent-of-millennials-are-willing-to-spend-more-money-on-this-1-type-of-product.html] are willing to pay more for products that come from socially responsible businesses. Loyal customers mean more money for the causes you advocate for and your business. * Feel-good PR -  Consumers are demanding ethical practices from the companies they patron, so much so that 81% of Millennials [https://www.entrepreneur.com/article/314156] expect companies to publicly declare their corporate citizenship. Publicly broadcasting CSR efforts bolsters your startup’s legitimacy and increases positive perception of your products. Turn to social media to showcase your latest CSR initiative, go-to-market in conjunction with a non-profit partner, catch the eye of local or national news or do all three. Find creative ways to keep customers in the loop and offer them ways to help your causes as well. If your startup becomes known for wonderful customer service, outstanding products, and civic action, you’ll become unbeatable. * Engaged employees - Employees don’t enjoy going to work just for the grind. They want to feel fulfilled, and CSR is a way to provide them with a stronger sense of purpose. A study by Cone Communication found that 62% of Millennials are willing to take a pay cut [https://www.conecomm.com/news-blog/2016-cone-communications-millennial-employee-engagement-study-press-release] to work for a responsible company. And research shows [https://hbr.org/2018/01/stop-talking-about-how-csr-helps-your-bottom-line] that adding prosocial incentives一where a company engages in an act to improve society rather than giving employees more money一increases productivity and retention, and even lowers employees’ wage demands. Plus, CSR programs are a magnet for talent. In 2019, 40% of Millennials [https://www.fastcompany.com/90306556/most-millennials-would-take-a-pay-cut-to-work-at-a-sustainable-company] said that they chose a job because the company performed better on sustainability than alternatives. What startups are doing CSR successfully? A quick google search will reveal there are plenty of startups [https://angel.co/corporate-social-responsibility-management] adopting CSR methodology. Here are just a few we’d like to highlight: * Paladin [https://www.joinpaladin.com/] - Paladin is a legal tech startup that streamlines the manual pro bono processes that disproportionately harm communities of color. Paladin’s platform helps companies give back in a cost-effective, organized way, tracking non-profit projects, assigning lawyers to tasks, and logging contributed hours. Paladin jumped on the CSR train from the beginning, establishing itself as a Public Benefit Corporation (PBC) [https://www.hutchlaw.com/blog/whats-the-difference-between-a-public-benefit-corporation-and-a-b-corp-certification] . This means they cited one or more specific public benefits in their charter’s statement of purpose, and use it as a North Star for any future business decisions. * Fiix [https://www.fiixsoftware.com/] - Fiix is a centralized maintenance management system that optimizes the utilization of physical equipment such as machinery, plant infrastructure, vehicles, and more. Over the past few years, Fiix introduced a triple bottom line CSR framework zeroing in on people, planet, and profit. As part of that plan, Fiix became a certified B Corp, partnered with Canada Learning Code, and went carbon neutral. Their hard work paid off一in 2019, Fiix was ranked as one of the Best Workplaces in Technology. Fiix’s Corporate Social Responsibility Manager details their journey in this informative article [https://medium.com/@Fiix/what-i-learned-from-introducing-corporate-social-responsibility-into-a-startup-42eeac13698] . * Ecosia [https://www.ecosia.org/] - Ecosia is a search engine that donates over 80% of its profits to reforestation. Users search the web with Ecosia’s Chrome extension, and the ads generate income used to plant trees. Ecosia is CO₂-negative, supports full financial transparency [https://blog.ecosia.org/ecosia-financial-reports-tree-planting-receipts/], and protects its users’ privacy. In 2014, Ecosia became the first German B Corp, and by 2019 it planted 60 million trees. Being genuine matters CSR can be an all-around win for the nonprofits you serve, your customers, your employees, and your investors. But to be successful at it, you have to think about how to integrate social projects in a way that is natural and shows actual commitment. Turns out, being genuine matters一a lot. HBR found that if employees think their company is using CSR initiatives only for financial gain, they’ll react negatively and put in far less effort [https://hbr.org/2018/01/stop-talking-about-how-csr-helps-your-bottom-line]. So remember, with CSR comes prospective investors, happy customers, a better world, and一of course一great responsibility.
How to
6 InfoSec Practices Your Startup Needs Now
Daniel Jakaitis / 4 months

6 InfoSec Practices Your Startup Needs Now

Early-stage startup life is about moving fast and breaking things. But eventually, your startup will hit an inflection point that requires deeper signaling of reliability to larger, more diligent customers. If you currently sell into mid-market or enterprise companies, you already know about the RFP and Information Security (InfoSec) review process. InfoSec reviews have grown in scope and complexity with broadening product offerings and stricter compliance requirements. InfoSec is an iterative process for all companies, there is no one size fits all process to running a secure startup but you should look for good heuristics [https://www.bvp.com/atlas/security-for-startups] and practices to start with [https://review.firstround.com/how-early-stage-startups-can-enlist-the-right-amount-of-security-as-they-grow] . B2B technology companies face the daunting and tedious tasks of InfoSec reviews, and let’s face it, you get asked the same questions over and over. So implementing InfoSec processes early in your company’s life will save you hundreds, if not thousands, of hours in the long run. The following six items are must-have practices for any startup taking the plunge into selling into the B2B big leagues: 1. Data Loss Prevention The number one thing prospects and customers care about is losing data. While data breaches resulting from legitimate hacking make great headlines, they are much less common than internal employee lapses. Whether a disgruntled employee is attempting to steal customer lists or a new intern accidentally attaches the wrong zip file to an outbound email, your team will need to know and stop this from happening. DLP (Data Loss Prevention) is a blanket term for tools that monitor the outbound data flow from a system. DLP tools come in a few flavors and cover a range of systems, from email to cloud infrastructure. The first point of failure for many companies comes from their inbox. Most startups today are using Google Workspaces as their email and document management tool of choice. Luckily, Google has made it easy to setup basic DLP rules [https://support.google.com/a/answer/6280516?hl=en]. Do this from day one. Overly strict rules may create challenges like sending a PDF to a prospective customer, so you may need to tweak the sensitivity and file types you want to block. Email is not the only threat vector from an InfoSec perspective. Cloud infrastructure that teams use to hold customer documents or files, like AWS S3, Google Storage, or Azure Blob Storage -- needs to be monitored. Beyond the basic permission restrictions that prevent improper access, deletion, or modification, monitoring for network egress (e.g. download or improper transmission to some other service) can be very tricky. It is rarely a viable option to lock down data storage completely. At some point, someone (or some application) will need access to the data. Luckily, in recent years, more intelligent services have sprung up to monitor network traffic in and out of a given cloud account. AWS offers two first-party services that cover this area: AWS Guard Duty [https://aws.amazon.com/guardduty/] and Macie [https://aws.amazon.com/macie/]. My personal experience with the latter has been relatively poor given the steep price tag. Guard Duty, on the other hand, provides anomaly detection alerts based on user access patterns. This has been a go-to service for the past several startups I have worked at and is a less expensive operational practice for monitoring data leakage. Keep in mind, DLP rules and processes will vary depending on the data your company captures, the lifecycle of maintaining that data, and the types and locations of the customers you serve. As long as you have some process to prevent data leakage, you will be able to get past these questions in your security reviews. 2. Encrypt Everything Encryption is an inevitable component of security reviews, so you need to start encrypting everything 一 even if you are a team of one. First, encrypt all team member laptops’ main storage devices. For Mac users, this is a simple setting. Eventually, your team will need to prove you enforce this level of encryption. Device management technology such as JAMF [https://www.jamf.com/] or JumpCloud [https://jumpcloud.com/] provides a robust way to ensure all company laptops are always patched and encrypted. Also, be sure to encrypt and backup your databases and file servers at rest. FYI, Google Drive does this for you out of the box, using industry-standard 128-bit AES keys to encrypt files. For cloud-hosted databases and storage work with engineers to ensure SSE (Server Side Encryption) is always toggled on. Bonus points: Speak with your engineering team to see how difficult it would be to provide each customer with their own unique encryption key that allows them to control their data. This doesn’t work everywhere but is a huge plus to any customer reviewing your security practices. This practice also provides your team a quick and dirty way to remove a specific customer's data by simply destroying their encryption keys without running delete commands on your database. 3. Think Through Onboarding/Offboarding Well Ahead of Time Besides providing a good experience for new hires, having on-boarding and off-boarding processes clearly outlined will show prospective customers that your company is a well-oiled machine. Before you have your next hire in the door, sit down and pull together a checklist. This list should include account access and permission levels, first-day paperwork, and initial meetings to set up. If you don’t know where to start, Notion has some good templates [https://www.notion.so/Kate-Lewis-54298ed2f5864676baf1239d511294b0]. During onboarding, account creation should be explicit and documented. You don’t need an internal Jira ticketing system. Simply send emails to the system owners (e.g. your VP of Operations or IT) that indicates who is getting access to what, and what level of permissions they require. Offboarding should be an even tighter process, particularly regarding who owns the process and is accountable for access removal. This is an area InfoSec reviews will examine closely. Clear proof of access removal should be stored and maintained for all offboarded employees. And physical devices should be in hand within hours of an employee leaving your organization. All your Data Loss Prevention practices go to waste when a disgruntled former employee walks out the door with his laptop. 4. Create an ISP and DR Plan Fledgling startups often balk at the idea of having corporate documentation. The “move fast and break things” mantra makes a great bumper sticker, but won’t fly when it comes to dealing with sophisticated customers. For that reason, you should develop two documents for internal controls the day you have your first serious customer: an Information Security Policy (ISP) and a Disaster Recovery Policy (DR Policy). An ISP is basically your InfoSec bible, a formal document that outlines all of your companies best practices: from IT asset management to email DLP monitoring to software development and deployment processes. It should cover escalation cases and documentation processes during a security event as well. . Review your ISP annually, at a minimum, with a formal meeting between all stakeholders (typically a Head of Operations, Engineering, and/or IT). Every update to the ISP should be logged and the document should be versioned. Hopefully, you never need to enact your Disaster Recovery Plan, but having this policy will bring peace of mind to your customers for when that earthquake finally does knock out one of your data centers. Your DR plan should include clear steps for maintaining data and service reliability in the event of a disaster. Not only does this prove you can restore backups, it also shows you have access to other facilities for application restoration, and a clear reporting chain for responsibilities. Set an annual calendar meeting to run through mock DR scenarios and document everything. 5. The Same Damn Machine for Everyone If you are early enough in your startup’s life and have not yet allowed multiple types of laptops or computers in the door, don’t start this bad habit. Device management is one of the most time-consuming operational components of a growing startup and can get very onerous if you allow for multiple device types. I am sure there are plenty of software engineers out there that will tell me, “But actually…”. But actually nothing. Don’t allow for different device types unless you want your IT Operations to become a living nightmare. Pick one: Mac, Windows, or if you are a real renegade, Linux, and stick with it for all current and future organizational devices. 6. Keep Data Flow Diagrams Updated Every InfoSec review will ask for a network diagram. For early-stage companies, this is an administrative burden, given that product data flow and networking are constantly changing. Your engineering leadership should review architecture diagrams quarterly, at the very least. For most teams, a data flow diagram is more than sufficient, indicating what data moves between services and how that data is treated at rest (e.g. encryption type). One of the best tools I have found to manage a clean diagram of cloud resources is Cloudcraft [https://www.cloudcraft.co/]. Not only will you be able to build out your cloud infrastructure diagram, but you can even use the tool to generate infrastructure code (e.g. CloudFormation, Terraform). Another team favorite has always been Draw.io. It has a seamless integration to Google Drive and offers easy cloud-specific diagram features for free. Remember to keep your data flow diagrams as clean as possible. Diagrams should always include encryption standards upheld and private/public network designations to reduce the number of questions you get back from the reviewers. Small teams may not have the time or money to tackle all of these processes at once. But having a human process [https://www.tugboatlogic.com/blog/security-best-practices-guide-for-startups-part-1-people-process-technology/] that replicates some technical security practices can be a sufficient stand-in during an InfoSec review with a customer. The goal with these 6 steps is to show that your company is at the very least thinking about how to mitigate and control operational risk vectors. Still have questions? Reach out to Dan!
How to
Designing a Startup Hiring Strategy
Daniel Jakaitis / 4 months

Designing a Startup Hiring Strategy

Metcalfe's Law, [https://en.wikipedia.org/wiki/Metcalfe%27s_law] often used to represent the value of a digital network, states that the number of additional nodes on a network is proportional to the square number of connections within that network. In other words, as you add team members, your communication structure within the team becomes exponentially more complex. In practice, rapid hiring can lead to disastrous communication lapses unless planned for ahead of time. At my current company's stage, hiring is a necessary accelerant for growth. We are at a point where processes exist, roles are clearly defined, and positions are ready to be filled. But for most companies, hiring plans are range-bound by resources and often result from fill poorly defined roles. There is a tendency to hire generalists in the first months and years of a startup, and as the company grows, specialized hiring begins to occur. This transition is not always obvious and necessitates a few strong operational best practices when approaching hiring. In early-stage startups, hiring can often be a death knell for a fledgling young company. Properly evaluating your team’s need to hire and then establishing a clear path to candidate success are critical. Failure to adopt a robust hiring strategy may not outright kill your startup, but it will almost certainly leave lingering scars that will impair your future growth. Let’s take a walk down the path to a robust hiring strategy and process that has worked for my teams. Overhead walks on two legs Ask any founder or CEO what their biggest expense is, and they will tell you employee compensation. According to the U.S. Bureau of Labor Statistics, employee compensation accounts for 68.7% of business expenses [https://www.bls.gov/news.release/pdf/ecec.pdf]. Ignoring the astronomical amount each employee adds, you need to consider the lasting impact individual personalities will have on your startup’s trajectory. With expense in mind, there are a few questions that can help you determine if now  is the right time to hire: * Can you easily define the role? And are there current operational processes in place to allow for reporting and KPI-driven success? Figure out what the measures of success will be for this new team member, and build a job description from there. * Is there a current process or workflow in place for this role? Follow along First Round’s sage advice to hire for your first 10 processes [https://review.firstround.com/focus-on-your-first-10-systems-not-just-your-first-10-hires-this-chief-of-staff-shares-his-playbook] . * Will this role fill a gap or build a layer? In the early days, focus on filling gaps. Strategically plan for when it is appropriate to add a layer. Mileage may vary here. For example, if you are a non-technical founder managing a team of developers, it may be time to bring in an Engineer Manager. Following Andy Grove’s model in High Output Management, I generally try to keep direct reports between five and nine per manager. As you scale, this number should shrink towards what I believe is the true ideal of 4-5 direct reports. This reporting structure is known as the ‘fire squad’ model一 a derivative of how Navy SEALs operate small, effective teams. * Are you over-hiring or hiring for hypothetical situations? At Kard, we hired quickly to deal with anticipated customer demand. But the demand never became a reality, so I had to let team members go. If you have contractual commitments from big clients, you may be ready to hire. If you aren’t truly confident money will hit the bank, then perhaps hold off. If you can confidently answer these questions, it is time to start laying the groundwork for your hiring process. Who is calling the shots? Before you can get the right people on the bus (sorry, Jim Collins), you need to get the right people in the room. Knowing who owns the hiring process (usually a team manager) and who has input in the decision-making process is hypercritical. Companies are lambasted on the internet for abusively long and sloppy interview processes. Make sure you don’t end up on that wall of shame and assign a hiring manager from day one. Your hiring manager will be 100% responsible for three things: * Writing the job description * Selecting team members who will run the interview(s) * Making the final decision While some teams take a democratic approach to hiring, your hiring managers should have the absolute final say on a candidate. Talking turkey The hiring manager has to wrangle one more task: getting compensation approved. Larger companies will have pre-approved salary and equity bands for specific roles. Most startups shoot off the hip in the early days, paying just enough to entice people to hop on the rocket ship. It can be hard to determine salary and equity compensation when you hear whispers of what FAANG employees are receiving. At Next Caller, we rely on Option Impact [https://www.optionimpact.com/] to, at the very least, inform our compensation structures. There are similar free services out there such as Glassdoor [https://www.glassdoor.com/index.htm] and Comparably [https://www.comparably.com/]. As a more mature startup, compensation is always reviewed by the CEO and typically requires board approval (especially if equity is involved). Early-stage managers should keep spreadsheets indicating the top-end pay for specific roles. Doing so will set the goalposts when negotiating offers with candidates and prevent you from under or over-paying a new team member. Process, Process, Process Whole books could be written on how to run an effective hiring process. There is no one-size-fits-all approach for each company, let alone teams within the company, on how to interview candidates. Small companies often don't have dedicated recruiters, so doing things that scale early will be super important. Oftentimes the hiring manager is tasked as the lead recruiter. Having been in this position before, the first thing I do is search LinkedIn for former co-workers that might be a good fit for the role I am hiring for. I am a big fan of recruitment automation tools like Trinsly [https://trinsly.com/] that allow you to create drip sequences of recruiting emails to candidates. Automation tools like this help when there is limited time to scour LinkedIn and handcraft emails to all the awesome candidates. Once you have a healthy pile of resumes, you need to begin interviewing. While running your cold outreach process, the hiring manager should outline the interview process. An example process for what we typically do for Next Caller’s engineering team is as follows: * 20-30 minute phone screen with hiring manager - This often includes a few high-level technical questions and casual conversation. * 45 minute Technical Interview - For both junior and senior candidates, this will often include a live coding exercise on a screen share. We keep our questions applicable to real engineering problems (e.g. get data from an API and transform its shape) and avoid overly academic or esoteric topics (e.g. reversing a binary tree). * 45 min "On-site" technical: group interview with engineers -  This functions as a way to meet the team and to hear the candidate discuss relevant technical topics. * 30 minute "On-site" cross-team: group interview with non-engineers - This is for the candidate to meet the team and answer questions. * 45-60 minute "On-site" hiring manager 1:1 - Depending on role, this can be very technical in nature and often involves architectural and system-level questions. The last half of this interview is meant to offer the candidate an opportunity to learn more about the role. Because we have our process dialed in and have checkpoints along the way to evaluate candidates, we can make offers very quickly.  Speed is a huge advantage when it comes to hiring great candidates. The only way you can be fast and still make high-quality hires is by having your ducks in a row. Know precisely the role you are filling, know your compensation packages (and get them approved, if necessary), and know your interview process. Communication is critical For my team, heavy reliance on Slack and clear frameworks and cadences of team-wide communication have been essential to managing new team members. This is doubly important in the era of remote-first work where you don’t get to chat at the water cooler between meetings. If you are at the point where you are beginning to make multiple hires, you need to evaluate your People Ops processes and communication cadences to ensure the structure you are building doesn’t collapse under its own weight. Mindful planning for new employees is the most important factor in the growth of a startup. Overshoot and you end up in the graveyard of startups past, undershoot and you end up in the early-stage struggles forever.
How to
How to Set an Operational Cadence
Daniel Jakaitis / 4 months

How to Set an Operational Cadence

My favorite days at Upwave were the Fridays that coincided with the last day of the quarter. My team would list every survey we wanted to close that day on a whiteboard and cheer as we erased each one. There was a hard stop at 5pm for our all-hands meetings, so adrenaline was high as we raced to the finish line together. Did it actually matter if we completed every survey before the quarter ended? Not at all. But the artificial pressure was worth those brief moments of celebration and closure. As Q1 comes to a close and spring is just getting started, I’m yearning for both fresh goals and for endings. Working remotely can be monotonous, and because I let work bleed into all hours of the day, I have a hard time ever feeling done. How can I recreate deadlines for myself to stay inspired? And how can we build those patterns into the rhythm of the company itself? The answer is operational cadencing. What Is an Operational Cadence? An operational cadence is a blueprint for everything that happens at your company over the course of a year, such as engineering sprints, offsites, and employee reviews. Once you understand your cadence, you can coordinate the flow of the whole company. When done right, the efforts of one department should directly contribute to the others [https://medium.com/craft-ventures/the-cadence-how-to-operate-a-saas-startup-436aa8099e8] , such as creating marketing buzz right after a big product release, which in turn creates a spike in sales. And that kind of energy gives the team momentum to keep going. Why Do You Need an Operating Rhythm? If you don’t know what you need to fit into your year, how will you make it happen? By putting your biggest priorities on the calendar first and synchronizing everything else around those, you can rest assured that both the rocks and the pebbles will fit into your jar of time. Predictability. Mapping out your schedule helps forecast your biggest revenue spikes and peak  spending periods. Especially in the early stages, cash flow can be crucial, and investors will understandably push for predictable revenue. Once you grasp your cadence, you can better align your reporting [https://visible.vc/blog/ultimate-report-part-2-cadence-operational-metrics/] (and maybe even schedule board meetings more favorably!). Productivity. Pushing your team before a big deadline? Sprints are a great way [https://hbr.org/2016/03/sprints-are-the-secret-to-getting-more-done] to do that, particularly because there’s a clear goal and end date. By building in periods of hustling followed by breaks, employees can better find their groove [https://leaddev.com/productivity-engineering-velocity/finding-your-groove-how-build-your-teams-operational-cadence] knowing what’s coming. Culture. How quickly does your team move? How much time do you spend in meetings? How often do you see one another? These are all defined by your operational cadence, too. Appropriately choreographing the company schedule [https://www.range.co/blog/the-importance-of-a-good-operating-cadence] lets employees know what is most important to the team. Signal your values early on by ensuring time is spent on what really matters. Establishing Your Cadence 1. Start with your goals To decide on the journey, first pick the destination. Annual goals and other critical priorities [https://www.linkedin.com/pulse/building-managerial-operating-cadence-michael-boufford/] should be the core piece of what your operational cadence revolves around. By setting checkpoints and quarterly goals, you can back into what needs to be done [https://boringstartupstuff.com/newsletter/jan-12th-2021-summit-your-goals] to hit each one along the way. 2. Drop in your building blocks You guessed it - meetings! Take inventory of how and why your team meets and decide whether each meeting cadence [https://www.hugo.team/blog/meeting-cadence] still feels appropriate. Should it actually be a meeting or can it be an email? Courtesy of Unleashed Technologies [https://www.unleashed-technologies.com/blog/how-meeting-cadence-can-make-happier-and-more-productive-team] How employees spend their days and weeks ultimately defines their experience at the company, as meetings directly impact productivity and happiness. It’s worth making the effort to more carefully allocate company time. Here’s a great cheat sheet [https://medium.com/business-operations/operational-cadence-and-rhythm-a-k-a-meetings-7aeaf8872627] on meeting types and ideal frequencies. 3. Understand your cycles Just as the seasons change, it’s natural to have ebb and flow in your business. Each industry will have its own crunch times and knowing these upfront will allow you to build in periods of review [https://chameleoncollective.com/blog/four-tips-finding-operating-cadence/] and reflection. Without space to consider what could go better next time, it's hard to keep pushing on the flywheel [https://www.entrepreneur.com/article/363516]. If work has been feeling like a slog lately, consider how you can add cadencing to your company or team. It's worth the celebration at the end of the imaginary deadline.
Deep Dive
When Freemium Fits
Daniel Jakaitis / 4 months

When Freemium Fits

Why I chose freemium I recently bought a tiny SaaS business [https://tryhexadecimal.com/]. When I took over, the original owner had built in a usage-based pricing model that started around $15 per month. As all aspiring private equity investors know, the first thing you should do when evaluating a business for purchase is to figure out how to raise prices. Counterintuitively, right after closing in early February, the first thing I did was set up a freemium pricing model [https://tryhexadecimal.com/pricing]. Hexadecimal operates in a crowded space and competes directly with products offered by large public companies. Some entrepreneurs reject the idea of competition, [https://www.youtube.com/watch?v=3Fx5Q8xGU8k] but in reality, plenty of great businesses take this approach. Standing out in a crowded space is an exercise in market positioning, features, and pricing. Because the uptime monitoring business is essentially commodified, differentiated only by  marketing spend and relatively minor features, Hexadecimal had to get a foothold with potential customers. Sometimes the quickest and dirtiest way to do this is going freemium. When to (not) go freemium Unique, premium enterprise products shouldn't go freemium. A product with high COGs should never go freemium (you don't want to lose money on the product you are selling). Most enterprise B2B products should not be freemium. Service businesses should not be freemium. Freemium works given the following conditions: * Your product has an entry point in the B2C space and can eventually go upmarket to B2B or B2C power-users (think Notion, Asana, Github). * Your product has a huge TAM. * Your product has very low fixed costs and sub-linear marginal costs for each new user. * A clear conversion path from free to paid usage (e.g. metered billing, feature gating, service agreements or SLAs). * No (or extremely low) manual onboarding effort. * An LTV that can remain greater than CAC at increasingly large ratios of free-to-paid accounts. On the surface, Hexadecimal checks these boxes. Let's dive in. How big is the TAM? To say that the market for uptime monitoring is large is an understatement. Estimates place the total number of websites indexed by Google at north of 30 trillion. While not every website needs uptime monitoring, most APIs and web services rely on tools such as Hexadecimal to alert users on downtime. There are estimated to be around 50,000+ [https://nordicapis.com/tracking-the-growth-of-the-api-economy] consumable, public APIs. This doesn’t include the hundreds of thousands — if not millions — of private and paid APIs on the internet, and the API economy is only growing. Needless to say, a lot of prospective customers are out there and the market has room for many players. How good are the margins? All in monthly operating costs for Hexadecimal run around ~$150. The costs grow sub-linearly for each incremental user. With only 10 paid users (and around 50 free users), the gross margins come in around 80-90%. At the end of the day the software allows us to effectively re-sell compute time from our cloud provider (AWS) given that we have no COGs. What is the LTV? Huge TAM, great margins, but what about the actual lifetime value of a Hexadecimal customer? This gets tricky, and potentially where the Hexadecimal freemium model begins to run into snags. Courtesy of Profitwell.com [http://profitwell.com/] Thanks to Stripe’s dashboard, we can easily find our current ARPU (Average Revenue per User) of ~$18 per month. As of today, Hexadecimal has churned no paying customers (!!). Using our formula above, our LTV = ($18 * months on the platform). The product has been around for 18 months, so the best I can estimate for customer lifetime is 18 months before churning (in reality, this will hopefully be longer). This gives us an LTV of ~$324. Pretty good. However, by using a freemium model, ARPU will likely begin to decline. The current ratio of free-to-paid users is 5-to-1 (50 free accounts /10 paying accounts). The goal is to keep the ratio of free to paid users below 20-to-1. At a 20-to-1 free-to-paid account ratio, LTV drops to about ~$81 per customer (this is because our LTV calculation is inclusive of customers that pay us $0 per month). This gives us substantially less wiggle room for our CAC. Estimating CAC In a bootstrapped business, with no sales team and no paid marketing, calculating CAC (Customer Acquisition Costs) comes down to pricing my own labor invested. With our current LTV of $324, and assuming I pay myself (hypothetically) around $100 per hour, I should convert at least 1 prospect or, upgrade 1 free customer, per 3 hours of effort. In other words, if I spend 3 hours writing this article, I should walk away with at least 1 paying customer to show for it (hint, hint [https://tryhexadecimal.com/]). What makes CAC calculations even trickier is the fact that it doesn't matter when I convert that person to a paying customer. Retroactively evaluating marketing impact can be a bit imprecise. Given the challenges with estimating CAC, it's best to keep track of the total labor (sales and marketing effort) for a given time period. For example, in a given month if I spend 10 hours ($1000) marketing and selling my product, I should see 2-3 paid conversions. If I don’t, then I need to re-evaluate the effectiveness of my marketing effort and iterate. In practice, this is probably best to do over 1-3 month periods to give your marketing and sales efforts time to gain traction (e.g. SEO, viral marketing, or paid marketing) before running your calculations. You can already see why keeping the free-to-paid ratio as low as possible is critical. The lower the ratio, the cheaper it is to gain new paying users. If this ratio rises to 20-to-1, we suddenly end up with less than 1 hour of marketing and sales effort per paying customer before our CAC becomes greater than LTV. Bad news bears. A note on operating costs CAC and LTV do not take into consideration development hours or operating costs (e.g. servers in this case). These are purely marketing and sales metrics that analyze the trade off of effort bringing a new customer on-board (paying) vs. the lifetime revenue from that customer. For Hexadecimal, the addition of each account adds vanishingly smaller costs to the operating expense of the platform (in the order of cents per month). New feature development, while it has some associated costs to maintain, requires only up-front capital investment that gets amortized over the life of the product (hopefully years or decades). With total development costs for a product like Hexadecimal, the amortization approaches near zero as more users onboard and the platform continues to produce revenue. This is just a complex way of saying this software has high upfront costs, with minimal incremental costs and therefore scales well. Do things that scale Sorry Paul Graham [http://paulgraham.com/ds.html], but if you are going freemium and you don't have VC money to throw around, you need to do things that scale. My labor is expensive (it is actually more than $100 per hour if you are curious). With an LTV somewhere between $80 and $325, the objective should be to create as wide of a prospect funnel as possible and consistently convert free to paid users. Initial strategies for Hexadecimal include: * SEO * Product lead growth * Partnerships * Viral marketing I won’t even try to unpack these here as they all warrant a deep dive of their own. The point here is that with limited resources, and a wide initial pipeline of users, we need to look for things that don’t require increasingly more inputs as the number of users increases. A little bit of psychology A common refrain from entrepreneurs when it comes to free tiers is that it doesn’t force the user to invest into using the platform. Even Freud was famous for always charging [https://onlinelibrary.wiley.com/doi/abs/10.1002/j.2167-4086.2009.tb00426.x] for psychoanalysis sessions as a way to force the participants to anchor themselves to the practice by way of financial investment into the process. Curiously though, by not charging up front, and allowing Hexadecimal users to begin entering data in the platform, we have created a new type of anchor. If we can get the user to simply enter a single website (or endpoint) into Hexadecimal and test the platform, we have created a synthetic form of remuneration. The user is now paying us with their data. As the owner, we can now use this information to turn this free user into a prospect for a paid plan, in effect generating the warmest sales lead you could possibly ask for. Freemium isn’t for everyone Freemium requires conviction and a clear path to conversion. In a commodity-like space such as uptime monitoring, freemium will allow me a shot at prospective customers that otherwise might balk at Hexadecimal in favor of older players. As Hexadecimal’s user base grows, monitoring LTV, CAC, and free-to-paid ratio will be critical. If you are considering a free tier in your app, be sure to have your costs in check and a clear way to trigger a free to paid conversion. Otherwise, forgo the freemium model and stay as a 100% paid solution. Freemium isn’t for everyone.
Operations
Becoming a Customer Success Superhero
Daniel Jakaitis / 4 months

Becoming a Customer Success Superhero

As companies in every industry compete to stay relevant to their customers, whether consumers or businesses, many have focused on improving their customer journey and experience. A new department has cropped up in response - Customer Success - and with it, new frameworks, hiring needs, and products. Forbes has named the field the “new growth engine [https://www.forbes.com/sites/forbestechcouncil/2020/11/03/why-customer-success-is-the-new-growth-engine-for-saas-companies] ,” and it shows no signs of slowing. As the Founder and CEO of The Success League [https://www.thesuccessleague.io/], a consulting firm focused on helping companies implement and improve customer success teams, Kristen Hayer [https://www.linkedin.com/in/kristenhayer/] knows just how big of a difference a great success team can make. Previously the VP of Customer Success at JazzHR, she is no stranger to going the extra mile for customers and coaching others to do the same. Excited to learn from her experience, we dug in about all things customer success. Customer success departments are a fairly recent development - what spurred the change? There are a number of different trends that sparked the need for customer success. First, and the one that everyone loves to talk about, is the shift toward a subscription economy. When money comes in over time instead of just up front, you need to continually demonstrate a return on investment to your customers. That’s the biggest objective of customer success programs. However, there are a couple of other important trends. There has been a shift in customer expectations driven by amazing consumer experiences. We’ve all had great experiences with different brands (Amazon and Mini Cooper come to mind for me) that have made using their products and services seamless. This is what buyers now compare your solution to, not just to your direct competitors. The bar is high. Additionally, the demographics of buyers, especially in B2B, have changed. Baby boomers and Gen Xers are retiring, and the people buying solutions are now largely Millennials. Again, this raises the expectations that customers have for your offering. These are tech natives, so what used to be a cool feature might just be table stakes for these new buyers. All of this has created the need for programs that focus on both the customer experience and customer value. Customer success programs vary, but these needs have driven the rise of this discipline. How has Customer Success changed as a result of COVID? I think that there are a couple of interesting trends that have come out of this very tragic situation: * Personal connections - Pre-COVID, most Customer Success Managers (CSMs) focused their communication on email, maybe phone calls. After a few months of working alone, at home, Zoom became the de facto communication tool for most people. This really opened things up. Everyone got to see each other’s workspaces, pets and children, and more personal relationships started to develop. I really hope this continues after COVID! * Working from home - Along with that, a lot of companies realized that their teams can be just as effective working from home as working in an office. Some organizations are eliminating their offices altogether, or reducing their office footprint. This means that companies need to invest in the home office setups of their customer-facing teams. Companies need to consider lighting, sound, wifi bandwidth, and backgrounds, and help their employees who have less-than-professional setups. * Stronger management practices - junior managers who used to manage by walking around found themselves in a tough spot when COVID took them away from the office. In order to be effective, they had to start following management best practices like conducting weekly one-on-one meetings, holding team members accountable to goals, regularly discussing performance, and delegating tasks effectively. This has created stronger management practices across the field of success, and in business at large. You previously led CS at JazzHR - what were your first priorities when joining the team? When I started working for JazzHR, there had never been a customer success or even account management function. Part of this was because the legacy customer base had mostly been brought in at a very low price point, and it didn’t make sense to invest in retention efforts. However, since the company’s start, they had moved up market and at the time I joined, there was a large segment of mid-sized enterprise customers. Churn had also become a problem for the organization, and they needed to get that under control. I inherited a support team, along with a customer marketing staff member. The customer success team had to be built from scratch. My first priorities in joining the team were: 1. Assessing the existing group. The team hadn’t been managed effectively, and there were morale issues in support. There were also a lot of inconsistent processes, and a few team members who weren’t a great fit for the role. I spent the first few months making sure that support was providing customers with a solid, baseline experience. 2. Reviewing the customer base. I did a lot of analysis on the customer base in my first few months, trying to uncover what was causing churn, and what could be done to address it. This research eventually became the foundation of our customer health score, but in the early days I was just looking for trends. I also took one of the support team members on a listening tour of the East Coast. From New York to Atlanta in one week, we met with 12 customers to talk about their experiences and needs. 3. Hiring CSM #1. I hired our first CSM in month 2. He was someone who had worked for me at a prior company, so I knew I could count on him to take the lead on proactive customer engagement without a lot of direction or coaching. We worked together to define and then refine the customer success program for a few months before hiring the rest of the team. What prompted you to start The Success League? When I wrapped up at JazzHR, I started looking for my next VP of Customer Success role. I interviewed with a bunch of startups here in San Francisco and found that all of them were facing similar challenges. They were trying to figure out the basics: reducing churn, developing a scalable program, hiring profiles, and reporting structure. These were all of the things I had already had to figure out in my prior 2 roles, and it would have only taken me a few months to get their programs pulled together. After 4 or 5 of these interviews I thought - wow, this is a business! If I could just come in and help companies build their programs, they wouldn’t need a VP right away, and could save a lot of money. That was the original vision behind The Success League. Of course, I’ve learned a lot about what customers want since those early days, and have expanded our offerings, but we still love working with early stage startups. What do you usually see companies getting wrong with CS? One of the biggest things is that people think of customer success as a team instead of a program. Customer Success needs input and support from product, marketing, sales, support, engineering. Of course in many companies, it is also a team of people who take care of customers, but that can’t be all it is. Customer success should be a company-wide program that consistently demonstrates value to customers. Also, you need to consider your business model. If you have a high-volume, low-price solution, you can’t afford to throw a bunch of people at your customers. You’ll need to build an automated (digital) customer success program. This is a challenge, but important to scalability and success. On the other hand if you have a high cost, enterprise solution, your customers will be expecting some hand-holding. Companies need to make sure that they offer the right kind of customer success to their customers based on their solution, brand promise and price point. Startups want to ‘move fast and break things,’ which often means CS bridges the gap between the vision of the product and what it can actually do - what is the right balance there? When you’re in a startup with an MVP solution, there will naturally be gaps. At that stage, it is OK to bridge those gaps with people, and I would recommend that you do. You need to make sure you have someone listening to customers and documenting what the next steps should be in terms of product development. However, as you grow, that high-touch approach won’t work. As you transition from growth to scale, you need to be very clear about where you do and don’t fit into the market, and to have a clear product road map that includes customer-facing and internal tooling. Where we see the biggest challenges when we start working with later-stage startups is when they haven’t considered the tooling required for customers to help themselves or for the internal teams to help customers. Often, support and CS teams have frankensteined a bunch of 3rd party tools together to try and help customers, none of which talk to the actual product and all of which require a lot of extra effort and context-shifting. At one point, it was probably just a quick fix for one customer, but it turned into the norm. The further a company goes down this road, the harder it is to fix. Product and engineering teams cannot be allowed to only focus on core functionality - they must consider tooling as well. How do you think that customer success will continue to evolve? Right now I’m seeing customer success evolve in 2 key areas: 1. Digital CS - Customer success has for a long time been a team-focused effort. Organizations are now realizing that won’t scale for all products, and they are considering ways to drive the same value for customers through technology. One-to-many communication methods are being employed more and more, and many companies only offer digital customer success to smaller customers. That said, I don’t see the human touch ever going away. At a minimum, someone still needs to consider the customer experience and design the digital journey. In reality, it is really tough to perfect your product to the point where no people will be needed to support it. 2. Focus on Value - The best CS programs have always focused on customer value, but many early CS teams were just support reps with a different title. A lot of customer success has been reactive, and organizations are waking up and realizing that won’t cut it. Customers expect proactive and predictive help, and they expect to see value for the lifetime of their use of your solution. Someone needs to draw the line between the product’s value and the customer’s expected outcomes, and CS teams are starting to realize that as their primary function. What advice would you give for someone looking to make their first CS hire? In a startup, you need a CS person who is senior enough to understand how to plan and grow the organization in the early stages, while also being personable enough to roll up their sleeves and actually talk to customers. I would look for someone who has led a CS program in a growth-stage organization, but isn’t so deep into their career that they are too expensive or hands-off. If you can find someone with this mix of experience who is willing to sacrifice some salary for equity, you have a winner. Luckily, right now is a good time to be looking because there are a lot of mid-career leaders on the market. What resources do you recommend to CS teams looking to up their game? Favorite Books on Customer Success and related topics * Customer Success Professional’s Handbook [https://www.amazon.com/Customer-Success-Professionals-Handbook-Careers_While/dp/1119624614] * Farm, Don’t Hunt [https://www.amazon.com/Farm-Dont-Hunt-Definitive-Customer/dp/0692620931/] * What Customers Crave [https://www.amazon.com/What-Customers-Crave-Experiences-Touchpoint/dp/0814437818] * The Jobs To Be Done Playbook [https://www.amazon.com/Jobs-Be-Done-Playbook-Organization-ebook/dp/B07X1LQ45Y] (Chapter 6) * On Change Management [https://store.hbr.org/product/hbr-s-10-must-reads-on-change-management-including-featured-article-leading-change-by-john-p-kotter/12599] - Harvard Business Review’s 10 Best Series Podcasts * Strikedeck Radio - Interviews with CS leaders on various ideas and topics * Reading for Success - Books and Articles about customer success and leadership * Helping Sells Radio - Interviews with authors and thought leaders on CS Training * The Success League CSM Certification Program [https://www.thesuccessleague.io/csm-training-program/csm-certification-program-15-classes] - 15 classes for CSMs * The Success League CS Leadership Certification Program [https://www.thesuccessleague.io/customer-success-leadership] - 12 classes for CS Leaders * Udemy: Customer Success: Build Cross-functional Relationships [https://www.udemy.com/course/customer-success-build-cross-functional-relationships/] To chat more with Kristen about CS and how The Success League could help, email her here [kristen@thesuccessleague.io].
HR
Hiring for Rapid Growth
Daniel Jakaitis / 4 months

Hiring for Rapid Growth

Started on the back of arguably the most successful Kickstarter campaign in history [https://www.kickstarter.com/projects/568069889/the-peloton-bike-bring-home-the-studio-cycling-exp] , Peloton has exploded in growth since its 2013 founding, earning its place among the dozens of decacorn startups from the last few years. Will Blaze [https://www.linkedin.com/in/willblaze/] joined Peloton in early 2016, just after their $75 million Series D round. Seeing the trajectory of Peloton, Will, following the famous advice of Sheryl Sandberg to take any seat offered on a rocket ship [https://www.forbes.com/sites/kashmirhill/2012/05/24/sheryl-sandberg-to-harvard-biz-grads-find-a-rocket-ship/?sh=4335056d3b37] , joined at a time when the hiring process was still in its infancy. With rapid growth throughout the first few years of his tenure, the recruiting team went from conducting interviews at the central ping-pong table to establishing an enterprise grade hiring process. Today, Will is part of a much larger recruiting organization at Peloton as a Senior Manager of Technical Recruiting. His experience through the growth stage at Peloton offers insight into what it takes to go from early stage startup to a global scale company. How did you end up at Peloton? I started my career as the first employee at a startup staffing agency started by a family friend and his co-worker. We scaled that business to millions in revenue, and then I left to start my own recruiting business. A year in, I remember reading Guy Kawasaki’s The Art of the Start [https://www.amazon.com/Art-Start-2-0-Time-Tested-Battle-Hardened/dp/0241187265/ref=pd_lpo_14_t_0/139-9340724-9833266?_encoding=UTF8&pd_rd_i=0241187265&pd_rd_r=bc0c055c-32e2-4f20-a3f3-99783dd06277&pd_rd_w=8NejX&pd_rd_wg=5gPMX&pf_rd_p=16b28406-aa34-451d-8a2e-b3930ada000c&pf_rd_r=CEN38CQMDYXAPX16F9WZ&psc=1&refRID=CEN38CQMDYXAPX16F9WZ] and seeing a diagram about owning a big piece of the small pie, or a small piece of the really big pie, so I thought it might be more valuable for my career to run the internal recruiting function at a scaling startup. I first joined Birchbox as a contractor, and then a year later, Peloton hired me as one of their first two recruiters shortly after the Series D round. Since then, we’ve hired thousands of employees, including highly sought after technical talent. Today, I manage a team of managers, recruiters, sourcers, and coordinators tasked with hiring the best technical talent for over ten of our departments globally. You joined Peloton as one of the first 150 employees. What was hiring and recruiting like when you first joined? How has it changed? When I joined in 2016, coding phone screens were done over Google docs and we only had one meeting room. Hiring managers were interviewing candidates on opposite sides of our ping-pong table, and white boarding was done in the middle of the office where our engineers were working. Looking back, I am impressed that we managed to get so many really talented people to work for us! Since then, we’ve matured quite a bit. We have an ATS with user behavior and inputs for our teams that creates actionable data, clear interview formats and flows, interview training aligned to our values, great vendors for interviewing software engineers, awesome sourcing tools, and most importantly an entire talent acquisition team with all sorts of roles and responsibilities that will enable Peloton to hire even more of the best talent in the world. A Peloton is a group of bike riders in the front of a bike race, working together to cut through the wind, better together than solo. One of our values is “together we go far,” and I’m so grateful for the team we’ve created for Talent Acquisition. What was the biggest shock or change the company went through as it grew exponentially over the last 5 years? From a recruiting perspective, it’s been a challenge to keep up with the growth. The targets kept getting bigger, and we’ve had to constantly evolve to execute. Additionally, as we’ve grown, the need for generalists has decreased, and now we need niche and highly sought after technologists in key areas. During such a rapid growth phase, what do startups need to start thinking about when it comes to hiring? How does this change as you grow? I would first recommend becoming educated on what good interviewing is. Read Who: The A Method for Hiring [https://www.amazon.com/Who-Method-Hiring-Geoff-Smart-ebook/dp/B001EL6RWY] or research the STAR method [https://www.themuse.com/advice/star-interview-method] for interviewing. You need to be fully calibrated on what kind of person you are hiring before you go to market so that you can create an interview process around that persona. Ideally, this interview process is no more than 4 interviews and can become a boilerplate for your startup to use for more roles. If you understand fully what the outcome of the role is, you can then begin to create an interview process for it. For a startup, you need to have a clear value proposition to the candidates. If a candidate has no connection to your product, that’s OK, but create quantifiable selling points around TAM, users, revenue projections, etc. That was most helpful for me when I was pitching skincare, hair, and makeup, or fitness companies to highly technical software engineers. If you’re super small, you can usually use Google Workspace for everything. Use Google sheets to track candidates, use Google docs for code pair interviews, Gmail for interview feedback to the team, and get every interview on Google Calendar. If it’s looking like you’re going to scale and hire 10 - 20 people in the next year, create a north star for the perfect state of your talent acquisition and a lightweight road map to get there. It could look like this: implement an ATS, bring in a vendor for coding interviews, hire the first recruiter to enable us to hit our hiring goals, etc. Understand that recruiting is a team sport and in a scaling startup everyone on the team will need to invest time in hiring. Our founders at Peloton always made time and would come in early or stay late to meet top talent. They were so helpful and never pushed back on interviewing. For your current processes, who are the stakeholders? How do you communicate and manage the hiring process from end to end? We have department heads who are keen on us ensuring we hit our hiring goals (which are quite large these days). We have monthly check-ins with our heads, and for some of the larger departments, we include the hiring managers in these check-ins as well. We review our hiring goals and always communicate any changes in process there. Recruiting managers and their teams are aligned to departments or job families. Our entire hiring process these days is done within Greenhouse, plus we have a few reporting tools to track progress. Slack is really helpful for creating rooms of interviewers, and there are great integrations these days for hiring within Slack too. For founders and operators, what things are critical to running a successful hiring process? Get educated on best practices for interviewing and understand that you need to invest time and resources into a great talent acquisition process. Be consistent with your process and don’t cut corners. Create fair and equitable hiring practices to attract diverse talent. If you reject someone, do it formally and provide feedback. For your first few hires, go to your network and try to find referrals. Create a list of “the best people you’ve ever worked with” and source from there. When you make someone an offer, spend a lot of time on the close, and be as transparent as possible with compensation, especially around equity. Consider creating compensation bands and levels for your team as early as possible. How has the current COVID-19 situation impacted your hiring process? We took precautionary measures prior to lockdowns and have been doing all of our interviews entirely remote for more than a year now. A positive is that instead of having to find time to schedule on-site interviews, aligning everyone’s calendars for back to back interviews, we have a lot more flexibility with scheduling. A negative is not being able to meet the team or getting a feel for the culture in the office. We had a lot of energy when you walked into our office; there was a buzz and you could feel it. It’s hard to recreate that remotely, but it's worth thinking about how you can do that for your startup (other than a Zoom happy hour!). What is the best anti-advice (what not to do) you have ever received? Don’t hire your friends. What have you been reading lately? I recommend Who: The A Method for Hiring [https://www.amazon.com/Who-Method-Hiring-Geoff-Smart-ebook/dp/B001EL6RWY] for anyone about to embark on hiring a ton of people for their team. What's your favorite way to destress? I turned off all notifications on my phone years ago and have never looked back. Encourage your team to take off and to detach.
How to
5 Ways To Show Employee Appreciation
Daniel Jakaitis / 4 months

5 Ways To Show Employee Appreciation

Employee Appreciation Day is Friday, March 5, so I’ve been pondering what that looks like as a newly remote company. Within my circles, “appreciation” can sometimes feel synonymous with “awesome perks,” making it harder to compete as a seed-stage company. Kard doesn’t have the resources to provide round-the-clock meals, gym classes, and massage credits [https://www.inc.com/business-insider/best-google-benefits.html] for every employee, but with the COVID-related office closings this year, that playing field has been leveled [https://headtopics.com/us/remote-work-will-shrink-big-company-perks-making-startup-hiring-easier-business-insider-13215078] . Stealing from Gary Chapman’s The 5 Love Languages [https://www.5lovelanguages.com/book/the-5-love-languages/], here are five currencies of appreciation to consider when you’ve maxed out on perks. 1. Words of affirmation Humans love knowing that our work matters to others, which is why we find it so unsatisfying to do pointless work [https://www.thenation.com/article/archive/graeber-and-pointless-work/]. Implementing channels for praise can let employees know how much their work means to you, to your customers, and to each other. Some will thrive on more public versions of praise, but for others, a few thoughtful sentences during a 1-1 will make a huge difference. Some examples include: * Shoutouts during company all-hands, either for individuals or for teams, who went above and beyond to accomplish a goal * A Slack channel for positive customer comments * A handwritten note of thanks left on a desk or mailed to the employee’s home * A glowing performance review after a stretch of hard work * Compliments from other employees during a 1-1 2. Acts of service Have an employee for whom actions speak louder than words? Show them your appreciation by doing something thoughtful instead. * Invest in their career. Most jobs are merely a stepping stone on a longer career path. If you can provide more stones [https://www.quantumworkplace.com/future-of-work/keeping-tenured-employees-engaged] , employees will want to stay longer. Ask them where they are headed and brainstorm together how their current role and the company can move them in the right direction. * Make an introduction. Are they struggling with a particular work challenge that you know another colleague just faced? Are they hoping to learn more about another career field? If they’re open to it, set up a time for them to talk with someone in your network who can provide a new perspective on the issue or interest. * Listen well. Feeling heard and understood is a gift, especially in a world of constant distraction. Show that you’re in the moment with them by being a great listener [https://hbr.org/2016/07/what-great-listeners-actually-do], and maybe you’ll even learn more about how they prefer to be appreciated. 3. Connection With the rise of loneliness [https://www.medicalnewstoday.com/articles/alarming-covid-19-study-shows-80-of-respondents-report-significant-symptoms-of-depression] during the pandemic, some employees may be looking to their job for camaraderie and connection. Yes, we may be tired of Zoom happy hours, but encouraging social connection at work can help reduce isolation. Freshen the company social scene with these ideas. * Include family members. We’re already peeking into each other’s lives a little more by taking video calls from home, so lean into that by featuring the offscreen characters. Extend an open invitation to significant others and/or children during more casual calls, or host a “bring your pet to work” day for added levity. * Foster friendships. Having friends at work is an important factor in happiness and productivity [https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/workplace-friendships.aspx] , and the workplace might be the only reliable source of connection for employees just starting out their careers. Build opportunities for colleague interactions by implementing an onboarding buddy system, events around shared interests, or interdepartmental competitive events. * Network with peers. Missing the days of work travel and constant conferences? Bring back some of that magic by holding virtual customer events, pairing up with a vendor to co-host a happy hour, or giving Lunchclub [https://lunchclub.com/] a shot. 4. Quality time Google famously grants employees 20% of their company time toward a project [https://www.inc.com/bill-murphy-jr/google-says-it-still-uses-20-percent-rule-you-should-totally-copy-it.html] of their choosing, the idea being that employees who spend time working on what interests them are ultimately more productive. Even if your company can’t afford to shuffle resources that way, there are plenty of ways to invest time in what matters to the employees. * Offer in-house learning opportunities. For an engineer, this might be implementing a new service or working on a hard problem. For an employee early on in their career, it might mean shadowing someone in a different department for a day to learn more about different career options. Investing time into the employee will expand their skillset and build a more loyal employee base [https://www.entrepreneur.com/article/358984]. * Turn off notifications during meetings. Between constant pingings and urgent emails, it’s easy to let ourselves mentally wander. Undivided attention shows that what the other person is saying matters. * Make space for deep work. Cal Newport’s book, Deep Work [https://knowledge.wharton.upenn.edu/article/deep-work-the-secret-to-achieving-peak-productivity/] , is a popular read, but how much time are we actually making for our most important priorities? Give your employees the space to produce their finest work, whether that be through a meeting-free day, permission to treat notifications asynchronously, or freedom to work on their own schedules. 5. Choice Chapman’s fifth love language is typically gifts, but there’s a limit to how much swag you can buy your team. As the world has dramatically shifted away from an in-person, perk-based economy, perhaps the new appreciation language is choice. Employees are getting a chance to choose where they will work and what hours they’ll keep. Without being tied to a specific location, they’re picking their own office setups and daily routines. They’re deciding between higher salary or increased equity, commuting or resource optimization. Not every employee will want to choose, as too many choices can overwhelm and confuse us [https://www.nytimes.com/2010/02/27/your-money/27shortcuts.html]. But for the right person, freedom in decision will make a huge difference in knowing how much you appreciate them. Appreciation will look different for each employee, and part of being a great manager is finding out what makes them tick. Show them you care by taking the time to do so.
How to
6 Unconventional Customer Acquisition Strategies
Liz Melton / 4 months

6 Unconventional Customer Acquisition Strategies

Even if you weren’t an early adopter of Slack, you were probably curious about the hype. Why were people so passionate about a work messenger tool? Not that chat tools aren’t sexy, but there must’ve been something else that made Slack so popular. The secret? A killer customer acquisition strategy. Slack highlighted its unique features, added valuable integrations, and offered its product for free. Combined with word-of-mouth and smart Twitter marketing, Slack was unstoppable, going from 500,000 users to 1.1M users in the first four months [https://clickup.com/blog/slack-growth-strategy/]. Slack’s customer list eventually grew to include the likes of Fortune 100 companies like Starbucks, Target, Oracle, and ETrade [https://slack.com/about]. In late 2020, Slack was acquired [https://investor.salesforce.com/press-releases/press-release-details/2020/Salesforce-Signs-Definitive-Agreement-to-Acquire-Slack/default.aspx] by one of the biggest behemoths in the tech industry一Salesforce. Not every startup can go viral like Slack, but getting creative with your customer acquisition strategies can generate some pretty incredible leads. In this post, we share six unusual acquisition methods and the startups that have benefited from them. What is a customer acquisition strategy? Just so we’re all on the same page, let’s take a moment to define customer acquisition. Most people think of customer acquisition as email marketing, SEO, or free trials. But at its core, “customer acquisition” refers to techniques that attract new customers to a business. Notice that we said techniques, plural. People respond to messaging differently and user needs can change with industry trends or economic shifts. For that reason, a comprehensive customer acquisition strategy should include multiple tactics to gain new customers rather than relying on one method alone. 6 unique ways to acquire more customers Much of customer acquisition is trial and error. What works for some companies doesn’t necessarily work for others. Regardless, brainstorming new customer acquisition strategies is key to keeping your strategy fresh. Below, we share some lesser-known, but fruitful, customer acquisition strategies to attempt this quarter. 1. Give your reviews a review 92% of B2B buyers [https://learn.g2.com/consumer-reviews] are more likely to purchase after reading a trusted review. Having just five published reviews can increase the likelihood of someone making a purchase by 270% [https://spiegel.medill.northwestern.edu/online-reviews/]. That’s nuts! Ignoring sites like G2, TrustRadius, and Capterra is irresponsible. Prospects shopping for a B2B tool inevitably come across these sites in their research. If you search for “best project management tool”, Capterra is 5th in organic SERP. When you click on the article, you might expect Asana or Trello to be at the top. Surprisingly, the first result is Monday.com [https://www.capterra.com/project-management-software/]. This list is sorted by “sponsored products”, but still, this is a fantastic way for Monday.com to get in front of potential buyers. If you don’t want to pay to play, start by scouring these sites for reviews and responding to them. Answer as many customer questions as possible, thank people who leave positive reviews, and reply respectfully and constructively to negative reviews. Don’t forget to ask existing customers to post reviews, too. Encourage CSMs or SEs to bring this up in their calls, add a link to post a review in your newsletter, and post your request to write reviews on LinkedIn or Twitter. You’d be surprised how many people comply, especially if you have a great product. 2. Buy your competitors Most early-stage startups aren’t flush with cash, but buying up a competitor’s domain might be worth it if you have a little to spare. Customers who are looking for something specific usually type in long-tail keywords in search. By buying up websites that rank for those long-tail keywords, you can instantly increase your organic traffic. The idea is to come up with a list of websites that land at the top of SERP and approach their owners. When you’re compiling this list, consider specific keyword rankings, organic search traffic, number of pages, number of backlinks, relevancy, audience size, and, of course, price. You might assume that this strategy is extremely expensive, but oftentimes these websites are personal blogs and sell for cheap. Matthew Barby, VP of Marketing at Hubspot [https://www.linkedin.com/in/matthewbarby/], cites this strategy as his “#1 favorite tactic to roll out when working on a project with a brand new domain.” In this post [https://www.matthewbarby.com/customer-acquisition-strategies/], he outlines a deal where he actually saved money buying another domain. Before acquiring the new website, it cost roughly $450 for his company to produce each blog post, and they’d publish 3-4 per month. That really added up. So his team did some sleuthing and found the perfect acquisition target—one that had already published over 500 well-performing articles. He negotiated with the seller to nab the domain at a price that worked out to only $31.70 per article, 7% of the original cost. Besides obtaining that website’s traffic, the company’s posts jumped two pages in search results, on average. Here’s a glimpse of their increase in organic traffic: While this system requires some research and investment, it can really pay off in the long run. 3. Old content is the new content The Content Marketing Institute found that small businesses (1-99 employees) spent an average of $81,500 on content marketing [https://contentmarketinginstitute.com/wp-content/uploads/2019/10/2020_B2B_Research_Final.pdf] in 2019. That’s a big chunk of change. Blog posts and case studies do yield leads, but they only get published once...right? Wrong. Repurposing content should be a major part of your customer acquisition strategy. Many B2B companies have hundreds of old posts on their site, and the deeper in the architecture posts are, the less likely they are to rank in search results. Make it a consistent practice to revisit old posts and update them with more recent statistics, new keywords, revamped CTAs, and even different titles. Consider merging a few posts to create an entirely new freebie and re-promote refurbished posts in newsletters, social media, or on Medium to attract more backlinks. Venture Harbor, a venture studio based in the UK, used this strategy for their article on B2B lead generation strategies [https://www.ventureharbour.com/b2b-lead-generation-strategies/]. The post was long and took a significant amount of time to write. To let it get stale would be a waste! The author updated stats, inserted more compelling images, included more keywords, and added “2021” to the title. As a result, the post now lands in the top 5 Google results for “b2b content generation”: Venture Harbor’s blog is just one example. Hubspot consistently incorporates this practice into its content strategy and has increased organic traffic by 105% [https://blog.hubspot.com/marketing/historical-blog-seo-conversion-optimization] . It’s a similar story for Zapier. Updating just 21 posts drove 52,431 additional visits each month [https://jessicagreene.marketing/blog/updating-website-content/] to the Zapier blog. 4. Create an online academy Do people understand what your company does and how it can help their business? If you’re selling a complex tool or idea, an online academy can help. Take Segment, for example. It can be tough to understand what Customer Data Platforms, or CDPs, do from a simple google search. To lower the barrier to entry, Segment created a free online academy [https://segment.com/academy/] with useful, non-salesy content. Prospects simply enter their email address and receive courses every week on the importance of customer analytics, what goes into a robust marketing stack, and how to make data-driven decisions. The leads generated from the academy are already interested in a CDP and want to learn more, meaning they are likely to be more responsive to sales teams that follow up. Plus, the academy makes for great advertising. People who are bullish on the product can quickly send a link to a peer, friend, or boss. The embedded courses explain exactly why Segment would be a good investment. The academy is also helpful from a partnership point of view. If Segment wanted to pursue a reseller agreement with another company, the academy is a low-touch way to teach partners and their sales teams what Segment does and how it might fit into their GTM strategy. 5. Go viral on TikTok Ok, hear us out. TikTok has 800 million active users [https://datareportal.com/social-media-users?rq=tiktok], ranking ahead of LinkedIn, Twitter, Pinterest, and Snapchat. According to Statista, 29.5% of 20-29-year-olds account for TikTok’s active user base, and adults aged 30-49 make up another 30.3% [https://www.statista.com/statistics/1095186/tiktok-us-users-age/]. What would happen if you could reach even a fraction of those users? TikTok is not the place to advertise your upcoming webinar [https://medium.com/@kkirt/tiktok-b2b-brands-oh-no-please-no-c091c7af4fb5] or recently published whitepaper. That said, coming up with clever, relatable ways to interact with adults on the app can certainly pique people’s interest. Recruit your most creative teammate to think of outrageous, funny forms of content. Are there common challenges people face when trying to implement a tool in your space? Can you show some behind the scenes footage? Is your product meme-able? We don’t yet have an example of a B2B brand doing this well, but a somewhat similar B2C brand, Wikihow, is excelling at this. First, they poked fun of themselves on TikTok, recreating (and encouraging others to recreate) pictures on their site: When COVID hit, they began creating especially relevant how-to content [https://www.youtube.com/watch?v=1MXgLjr7Sms] about the pandemic, like how to wash your hands, how to make masks out of old t-shirts, and how to meditate. So many people gravitated to the Wikihow account that it gained the attention of the United Nations. Now, Wikihow is a part of the Verified Initiative of the United Nations [https://www.wikihow.com/Author/The-Verified-Initiative-of-the-United-Nations]. 6. Leverage your NPS survey Most customer success teams these days send an annual or bi-annual NPS survey to measure customer satisfaction. If your customers already respond well to your NPS survey, there’s something else you might consider adding in一a referral request. Customers already expect to receive this survey and have demonstrated that they’ll answer it. Adding one more question into the mix, “Is there anyone you think could benefit from this product?” can open a lot of doors. If you don’t feel comfortable altering your NPS survey, that’s understandable. Other referral campaigns can work well, too. Make sure to incorporate a strong incentive, whether that be a discount, swag, or a certain number of free users. Blackbaud [https://www.blackbaud.com/], a software solution for non-profits, employs this strategy with their “Blackbaud Champion” program. Even the language Blackbaud uses on this landing page gives customers the feeling that they’re giving Blackbaud the “ultimate compliment” by referring their colleagues. To ensure that referrals are legitimate, Blackbaud requires customers to specify exactly what product(s) their referral might be best suited for. For every referral that becomes a Blackbaud customer, the referee will receive a $100 gift card. Put your customer acquisition strategy into practice So let’s recap. Customer acquisition is all about drawing in new customers to your business. You’ve probably signed up for a free trial, downloaded a free “Definitive Guide to X,” or clicked on the highest ranking website in a Google search. While these methods can work, they are becoming unoriginal and aren’t enough on their own. Repurposing content, gaining excellent reviews, creating online academies, and going viral on TikTok are a start, but now’s the time to think outside the box. What do you do every day that influences your buying decisions? What do you read to get informed? What social media do you use? What do your customers already love about your product and how can you play that up? Put yourself in the mind of your consumers, get creative, and let the magic happen.
How to
Creating Company Culture
Daniel Jakaitis / 4 months

Creating Company Culture

Kard is in the middle of a hiring spree, and the process has made me think about who we’re becoming as a company. At eleven people, we are too big to get away without defining our company culture but not yet large enough to be hiring a Head of People Ops. After jealously ogling the career page [https://www.notion.so/Careers-715284aa50454d778de46220e3068df4] the Otis [https://www.withotis.com/] team has built, I started thinking about how to bring that clarity to Kard’s values and process. It’s still very much a work in progress, but here are some questions that have helped me. What’s our ideal culture? Put more broadly, what do you want your team to be known for? How do you define yourselves and what are your common threads? Company culture can be what ties otherwise incredibly different individuals together in pursuit of a common mission. Good culture to me means good process. I envision clearly defined values and systems that work those values into everything we do, from client interactions to interviews. The confidence of Otis’ page [https://www.notion.so/Company-Culture-cf25a1c921b142b2a67ae993493bae13] resonated with me; they know who they are and who they want to attract. And their entire machine is built around executing on those desires. Feeling unsure of your ideals? Start by thinking about how you’d want your team to respond in the following scenarios. * An unhappy customer is asking for a refund * An applicant is turned down after the final round interview * A teammate needs extra help while caring for a sick child at home * The team exceeded their annual goals ahead of time * A promised deadline requires weekend work * Significant conflict arises during an internal meeting Were there common themes among your responses? Did other employees have different answers? Use the feedback to jumpstart a discussion on company values and how to articulate them within each scenario. Once you have your value list, take a look at how you’re doing now. What’s our current culture? When the company is small, culture may be largely intangible and heavily based on the personalities of early hires. Because every new employee will change the company’s overall culture, it’s good to recognize your starting point. Investigate the present culture by asking the following questions, and pay special attention to fresh perspectives; new hires will have the clearest view of your culture when everything still feels unfamiliar. * What’s communication like within the team? * How do we run meetings? * Which fun activities is the team drawn to? * How do we handle internal conflict and difficult conversations? * What are our most active Slack channels? * How do we talk about the company when interviewing applicants? * What do we consider good work and how do we praise it? * Which milestones do we acknowledge and how do we celebrate them? * How well does the team know one another? * How are positions titled and how often do they change? How far off are we? Truth time: are you already close to your ideal or is there work to be done? Even if company culture is in a good place now, Ben Horowitz notes that it “is not a mission statement; you can’t just set it up and have it last forever.” (He has many more great thoughts in his book What You Do Is Who You Are [https://www.amazon.com/What-You-Do-Who-Are-ebook/dp/B07NVN4QCM].) Values in hand, systematically investigate each aspect of your company to integrate them. Are there certain areas that are better representing your culture? As I’m working through the below list myself, I’m prioritizing the high traffic touchpoints, such as team meetings and recruiting, and paying special attention to opportunities for first impressions. For a fuller list of aspects to consider, check out Status’ People Ops page [https://people-ops.status.im/]. Internal * Traditions: What recurring events do we have on a weekly, monthly, or quarterly basis? How does the team have fun together? What kind of swag do we give employees? Do we do anything for them on their work anniversaries or birthdays? * Communication: How do we talk to one another? Do we have a shared vernacular, perhaps because we have all read the same book? Are there cliques within the team? How do we disagree with one another? * HR processes: Are values a part of our onboarding and offboarding processes? How about our 1-1s and employee reviews? Are our processes clearly visible and are we actually following them? * Compensation: Are our benefits adequately supporting employees in the pursuit of our values (e.g. if constant learning is important, consider a personal learning budget)? Do our pay packages and policies represent our ideals? External * Marketing: How do we write about ourselves on our website or on LinkedIn? Is this an accurate reflection of how we communicate internally? * Recruiting: Are we embodying our values in our interactions with potential employees? How are we incorporating personality fit into our candidate grading process, and are we ever compromising those scores for other factors (e.g. past experience with a competitor)? * Customer relationships: Are we treating customers with the traits we value? Are we optimizing for efficiency as we scale at the expense of customer experience? How do we manage this going forward? Company culture is not as simple as an annual checklist. Let it go unmonitored for too long, and it will become messy and overgrown like an untended garden. But who is responsible for company culture? To some extent, everyone. Each person you hire will represent your brand, and the accepted culture will permeate through every interaction. Values naturally flow from leadership, as employees will pay particular attention to the actions of the executives. Define your cultural guardrails early, even if the team is still small. The CEO will likely own the vision to start, but this can be transitioned to a People Ops/HR hire [https://buffer.com/resources/people-team/], typically around the 40-50 employee mark. Revisit your values and processes before there are problem spots. Consider the frequency of the interaction and build natural feedback loops. For instance, every employee will go through onboarding, and it’s formative to their early impressions of the company. Do a postmortem with each new hire a few weeks after onboarding, questioning whether the company is what the employee expected and if the beginning weeks have exemplified the desired values. > “Because your culture is how your company makes decisions when you’re not there. It’s the set of assumptions your employees use to resolve the problems they face every day. It’s how they behave when no one is looking. If you don’t methodically set your culture, then two-thirds of it will end up being accidental, and the rest will be a mistake.” ― Ben Horowitz, What You Do Is Who You Are Take the time to define your culture, or else it will get defined without you.
Deep Dive
Perfecting Your PEO
Daniel Jakaitis / 4 months

Perfecting Your PEO

You have finally incorporated and started selling your product. It feels great. You suddenly realize you need to start hiring soon and have no clue what to do beyond the interview. How are you going to pay your workers? Do you need to offer insurance? The startup dream isn’t about cutting payroll checks and negotiating medical insurance plan pricing. Perhaps it's time to use a PEO, so you can get back to building and selling your product. What exactly is a PEO? PEOs (or Professional Employer Organizations [https://en.wikipedia.org/wiki/Professional_employer_organization]) are corporations that act as middlemen in handling crucial parts of small and medium sized business - things like payroll processing, health benefits, workers' compensation insurance, employers' practice and liability insurance (EPLI). Using a PEO takes the stress off of having to handle the day-to-day micromanagement of the business backend, leaving you more time to focus on growth and expansion. A Quick History In the 1960’s, employee leasing became [https://en.wikipedia.org/wiki/Professional_employer_organization] common practice. It allowed companies to augment staff without the overhead of providing benefits or handling additional payroll. Marvin R. Sellers pioneered the employee leasing business when he got his start leasing administrative staff to local doctor's offices in Southern California. Leased employees were compelled to participate in the process by ancillary benefits and tax incentives beyond what was typically available for temporary positions. By 1986 [https://www.inc.com/magazine/19881201/6325.html] more stringent taxation guidelines eliminated most of the employee leasing benefits.  The concept was here to stay, it just had to undergo a remodel or two before reaching its final form in the PEO. Today’s PEO firms provide small and medium businesses bargaining power to negotiate insurance, retirement plans and other ancillary benefits.  With the cambrian explosion of startups over the last two decades, combined with the expansion of API-driven business automations, the PEO industry is booming - with revenues approaching upwards of $174 Billion [https://en.wikipedia.org/wiki/Professional_employer_organization#cite_note-1] annually in 2017. Do I need a PEO? Short answer, yes. If you find yourself struggling to properly understand and put together things like employee benefit packages, payroll processing, and workers' compensation insurance, a PEO can be your best friend. Mismanagement of employee related compensation and benefits can not only financially impact your business, but it also carries significant legal risk. Having professionals handle some of the most sensitive parts of your operations, coupled with massive cost savings from collective bargaining power make choosing to use a PEO a no brainer. PEOs in a Remote Working World PEOs are actually a great friend for business in current times with everyone focused on remote learning and working-from-home. PEOs play a huge benefit for your business with their expertise, allowing them to help you better select employees to hire to help you grow and expand your business. Your hires won't have to make any sacrifices to get the benefits they feel they deserve, with you receiving the best rates and services with your clout in the PEO umbrella.PEOs handle everything that's needed to keep your employees feeling safe, happy, and comfortable - they take care of benefits, health insurance, compliance requirements, virtual onboarding and accessibility/tools for remote teams, and anything else necessary for your business to thrive and survive. How does this all work in practice? PEOs offer a system of co-employment; the PEO becomes the employer of record and handles tax purposes, filing tax paperwork under its own tax identification numbers. (If you currently use a PEO, go take a look at the EIN your employee W-2’s are issued under. It should be the PEO who handles payroll for your company). The client company continues to run as it did before and direct the activities of its day to day employees. PEO's usually charge an administration fee for handling all of this for the business . When you use a PEO, you're entrusting them to handle [https://money.cnn.com/magazines/fsb/fsb_archive/2007/03/01/8402022/] some of the most crucial parts that are integral to your business success. PEOs serve dozens, if not hundreds, of companies, which in turn allows them to offer discounted rates when it comes to medical, dental, and vision insurance for your employees. They use their clout to get you easier and better systems to manage your retirement vehicles (e.g. 401k), and using them takes all of the stress and micro-management out of having payroll set up. It’s Not All Roses When delegating sensitive ops processes to another entity, be wary of the pitfalls. Specifically with PEOs, know your company is still partly liable for any EPL or worker’s compensation claims. In other words, if an employee brings a workers’ comp claim, both entities can be named liable. Additionally, PEO liability insurance usually has relatively low caps on coverage. Check that your company maintains additional liability coverage beyond what the PEO provides. Because a PEO will handle tons of sensitive processes for your company, periodically review the administration of things like payroll taxes and employee benefits to ensure everything is going smoothly. Keith Levinson, a PEO expert who works at Coadvantage tells startup operations professionals to “[e]nsure that quarterly and year end taxes are filed appropriately and accurately,” even if your PEO might handle parts of it. How to Choose a PEO If you’ve been around the startup ecosystem for more than a minute you’ve probably already dealt with some of the contemporary PEO’s out there such as Justworks, Gusto and Rippling. There are dozens of PEOs to choose from -- it’s worth taking a glance through the major players for the startup ecosystem: To get started, below is a quick list of the major players in the PEO space commonly used by startups: * Gusto [https://gusto.com/?utm_source=boringstartupstuff.com] * Justworks [https://justworks.com/?utm_source=boringstartupstuff.com] * Rippling [https://www.rippling.com/?utm_source=boringstartupstuff.com] * CoAdvantage [https://www.coadvantage.com/?utm_source=boringstartupstuff.com] * Sequoia [https://www.sequoia.com/?utm_source=boringstartupstuff.com] (no, not the VC fund!) PEOs these days are essentially commodity businesses. The more tech-focused platforms generally offer similar digital experiences and features. At a minimum, your team should be looking for payroll administration, insurance plans (medical, dental, vision), workers’ comp insurance, ELPI (Employee Practices Liability Insurance) and HR consulting services. Pricing varies only slightly between each platform -- usually ranging from base prices starting at $50 per month, with each new employee adding $6-10 in monthly costs. Levinson advises startups that one of the biggest differentiators is that “a PEO with a strong service model [they] should provide proactive rather than reactive HR.” Cutting a few extra dollars in cost could potentially lead to headaches down the line. “There are few (if any) drawbacks for companies to partner with a PEO assuming the company has 10-100 employees,” Levinson says,“assuming the company has less than 100 employees, PEO is a no brainer as it saves time/money/hassle.” Let a PEO take care of your employees so you can handle your business. If you are an early stage company looking for help, reach out to Keith Levinson [https://www.linkedin.com/in/keith-levinson-peo-guy/]. He is a great resource for PEO knowledge and can answer any technical questions about getting your company set up.
How to
How To Make Big Decisions
Daniel Jakaitis / 4 months

How To Make Big Decisions

A friend received an offer from a seed-stage startup this week. Already at another seed-stage startup, she asked my thoughts on the offer itself and on the switch between companies. I walked through the factors I consider in my own decisions, but as I talked, I felt less sure of my own process. Nothing in the startup world is certain; we are all just betting on outcomes [https://medium.com/@justincie/startup-success-isnt-about-genius-it-s-about-manipulating-the-odds-873d93d02029] . We can optimize for certain factors, but in the end, we must decide how to play our hand. Plenty has been written about joining a startup, but how do we decide when to leave one? A startup is either growing or dying [https://medium.com/start-up-vision/a-startup-is-either-growing-or-dying-564af328a6c4] , and a well-positioned one should have a strong market, assets, and team. Even with all three, the journey will still be difficult. If the bus is going to run out of gas before reaching the destination, does it matter if I’m in the right seat [https://www.jimcollins.com/concepts/first-who-then-what.html]? First think through business viability to figure out if you even want to be on the bus. Here are questions I use to get started. Market If the market is established: * Who are the competitors in the space? * What do the recent IPOs/acquisitions look like? * What is the company’s competitive edge? If the market is new: * Why is now the right time to start the market? * Why will the company succeed in places other companies haven’t gone? Assets * How far along is the product? * Who are the customers and how are the relationships? * What’s the funding situation? * Who are the investors? Team * Does the team have the right experience to execute what needs to happen? * Are there growth plans to mitigate the obstacles that lie ahead? * Do people know their own strengths and weaknesses? * Are difficult and honest conversations being had about the company’s direction? Feeling good about all three? Plenty can still go wrong, but your company might have a chance. If two of the three are in a good place, is there a route to quickly strengthen the third? What would it take to make that happen and how likely is the company to execute on it? It’s impossible to predict all of the factors crucial to success, but it doesn’t hurt to ask the questions. Maybe the startup is doing incredibly well, but you’re feeling less sure about your seat on the bus. Is that a sign you need to leave or just “grass is greener” [https://medium.com/@ubiquityvc/startup-vs-big-tech-why-the-grass-isnt-always-greener-e8cebb6d5191] syndrome? Try running a pre-mortem [https://www.businessinsider.com/why-negative-thinking-can-help-you-successfully-make-decisions-2020-10] on your career trajectory. Write out how you might fail and what the fallout could be. Will you lose relationships because of the long hours you put into the startup? Will the stress of the long hours cause you to pack on pounds? Will you end up wishing that you had stayed at your startup until it went public? Looking at the worst case scenario can show us that what we most fear either won’t be that bad or that we can proactively avoid it. Identify the paths you’ll regret most and work to avoid them [https://alyjuma.medium.com/the-regret-minimization-framework-how-jeff-bezos-made-decisions-4d5a86deaf24] . But what about the best case scenario in which your hard-earned equity turns into millions? It’s highly unlikely [https://www.financialsamurai.com/stock-options-are-for-suckers-who-accept-below-market-rate-pay/] but not impossible. Are you optimizing the factors that matter most to you where you are? Salary Early-stage startups aren’t known for particularly high salaries, but if you’re with the company as it goes through additional rounds of funding, this can change. Significant contributors have more leeway on compensation than they might know, especially if additional funding has come through. Title Yes, titles are subjective because they differ widely between companies, but they can also give weight to your credentials. Are there still opportunities to move up the ladder where you are, even if that will mean creating a new title? Would you be able to get the same title outside of your company? Equity Do you have enough stake in the company to feel that your contributions could eventually pay off? Again, it’s unlikely, but we have to take asymmetric bets [https://eriktorenberg.substack.com/p/take-asymmetric-bets] to win big. Knowledge Learning doesn’t pay the bills, but incredible experience from one role can shape the rest of your career. * Are you getting more responsibility than you might at another company? * Are you in the room when big decisions are being made? * Are you working alongside industry experts that you may not have the chance to be near again? * Are you establishing relationships (customers, investors, coworkers) that will propel you forward later on? * Is your impact more significant where you are than at a larger, more established organization? If all else fails, determine where you ultimately want to go and backtrack from there [https://medium.com/@m2jr/how-to-build-a-breakthrough-3071b6415b06]. If you’re unsure of the destination, it doesn’t really matter which bus you get on.
Deep Dive
Writing Better Cold Emails
Daniel Jakaitis / 4 months

Writing Better Cold Emails

In today's era of drip campaigns and automated sales message, a well-crafted cold email stands head and shoulders above its competition. The only way to write a great cold email is to be authentic and maybe even a little bit weird. In his recent book, Authentic Selling: How To Use The Principles of Sales in Everyday Life [https://www.amazon.com/Authentic-Selling-Principles-Sales-Everyday/dp/1735956902/] , Jeff Kirchick lays the framework for the perfect cold email. For those of us who haven’t spent the past fifteen years in a sales role, the thought of sending cold emails can be scary. Hopefully the except from Authentic Selling will ease some of those nerves. Authentic & Eccentric Cold Outreach People are weird. All of us are eccentric in one way or another. The first thing I tell inside salespeople when I hire them is that I want them to embrace themselves and everything that makes them authentically weird. The weirder they are, the better. And whether or not you like my theory on weirdness, it is absolutely true today that most buyers are inundated with emails, many of which come from salespeople, vying for their attention. What this means is that you need to stand out from the pack. Hence, the weirder you are, the better. Even though Waldo was dressed in strange red and white attire, he was always hard to spot in those “Where’s Waldo?” books because he wasn’t weird enough to really stand out from the pack. And Waldo looked like a pretty weird guy. You need to be weirder than Waldo. I compartmentalize a good sales email into three parts: The Excuse, The Value Proposition, and The Ask. What does this mean in the real world? It means that when I write a subject line for my e-mail, the goal is to get the person to open the e-mail. It is not to get that person to buy my product. It is simply to get them to open the message. Here are some better examples of subject lines that are hard to ignore: > “Hello from a fellow alumnus of X University” “Hello from a fan of [buyer’s product company name]” “Fellow Boston Bruins fan looking to connect” Or, perhaps for a Star Wars fan, “Read or read not, there is no try” You get the picture. You are using something appealing to your target to establish some mutual synergy. And from there, the goal remains the same. The goal of the first sentence is to get the reader to the second sentence. The goal of the second sentence is to get the reader to the third sentence. The goal of each and every word is to get the reader to the next word. And eventually, as you will soon see, the ultimate goal at the end is to have mutual agreement to meet together. But it is only the sum of the parts – the e-mail in its entirety – which should convince the reader that this is a worthy outcome. None of this can be accomplished if you are writing an essay to the client. Most people feel out whether or not they have the time to read an email by staring at its sheer size once they open it. If the email is too long, it is likely to get deleted, even if the email itself is some of the finest prose ever known to mankind. This is really no different than how you would approach the proverbial stranger at the bar. If you went up to them and told them your life story, they are likely to be a little creeped out. But, if you led off with something short and sweet about a commonality, it leaves the door open for curiosity that can spark a conversation. Without further ado, let’s start to dive into the structure of sound cold outreach. Part 1: The Excuse I call the first part of cold outreach “the excuse” because you are always interrupting someone’s day, and when you interrupt someone’s day, you better have a good excuse. You would never walk up to someone, for example, who is clearly on a phone call, and ask them for directions. If you did, you would at least preface your statement with a good excuse: “Hey, I know you look really busy but this is kind of an emergency so I hope you don’t mind me interrupting you to ask a quick question?” Anything short of that and the person who you are calling upon for help is likely to leave with a bad taste in their mouth over your poor manners, and this makes them all the more likely to decline helping you or to provide you with bad directions. No one wins in that situation. The excuse for reaching out to someone should always be something personal. Most sales training programs miss this, encouraging the sales rep to open up with some sort of before and after scenario. This could be something about how bad life is today in the absence of the product that is being sold, and what life looks like after, followed by examples of satisfied customers and some statistics to substantiate the point. While none of this is objectively wrong to do, per se, it is also what pretty much everyone else is doing. And if you are fighting for someone’s attention and every single vendor is promising them a better outcome, ultimately it all just starts to sound like white noise. Here are some examples of successful outreach I have performed. I found someone who, like me, was an English major in college. She happened to go to The University of North Carolina. Anyone who goes to UNC hates Duke University as they are bitter in-state sports rivals. As a fellow English major myself, I penned an email to this prospect with the subject line “Hello from a fellow English major and Duke hater.” I opened the email by lamenting how everyone told me I would never get a job out of college with my useless English degree and how it was serendipitous for us to find ourselves linking up in the world, both gainfully employed, with me trying to sell her my product. I went on to talk about how we must also have a mutual disdain for Duke. Let’s face it, Duke resembles the New England Patriots in many ways, in that everyone who is not a fan of either team generally has a lot of ill-will toward their fanbases. And this is coming from a diehard Patriots fan. It’s just reality. The prospect I was writing to wrote back to me saying that the email was clever and that she was interested in connecting with me. Meanwhile, I had only spent one or two sentences in the email getting to the meat and potatoes of what we were even selling – and even then, I left it all in high-level terminology. The point being, it did not really matter exactly “what” it was that I was selling – it was the “why” that is always more compelling. And in this case, the “why” was this commonality we had developed which might lead to some building of trust. From a point of trust, no matter what you are buying, you can at least assume that the seller is going to do everything they can to make sure you are successful. Here is the actual email: > Hey [Prospect], Couple things... 1. Real happy to see a fellow English major thriving in the workforce! They always told me my degree wouldn't be worth much unless I became a teacher, turns out I am saving lives one at a time by selling fraud prevention and call authentication technology. 2. Duke stinks so it's great you did all of this at UNC. In all seriousness, you look like the person who would vet technology for authenticating inbound callers. I know you guys do some stuff with [our competitor], but we would love to have an opportunity to show how we could augment those efforts. Let me know if you would be open to connecting sometime. Cheers, Jeff There is something important I want to call out about this. Nowhere in this email did I compromise my authenticity. I really was an English major in college, I really do enjoy meeting people who shared my major, I genuinely do enjoy joking about us both being gainfully employed, and I also authentically hate Duke (N.B. – apologies to any Duke alumni/alumnae reading this). So nowhere did I sell my soul by writing this message. And this is the thing that is so hard for people to realize in today’s politically-charged climate: you have so much more in common with most people than you would think. If you could only spend a little bit of time peeling the onion, chances are that you would have so much to talk about and agree on if you could get over the obvious differences you see at surface level. It is just a matter of finding out what those commonalities are so you can exploit them and turn them into a positive for both sides. Remember when we talked about empathy a couple chapters ago? You’re going to need that to be able to get far enough with people to realize what values you share. It is those who lack empathy and write other people off entirely that do not even give themselves (and others) an opportunity to see what values they share. Another example of a good excuse to reach out to someone is based on content that they have written. I once uncovered the personal blog of a prospect of mine called “The Traveling Parent.” The blog was basically about how this man balanced his work life with his home life. As you can guess by the title of the blog, he traveled a lot for work and rarely saw his children. He had to get creative about using technology to stay in touch with them, and when he was at home, he needed to set certain boundaries in order to maximize his time with his children. I was actually personally touched while reading his blog. And even though I am not a parent, I do travel quite a bit for work and I could really empathize with his struggle through my own personal experiences of feeling homesick whenever I would hit the road for a new destination. I wrote him a message saying as much after dozens of failed attempts to connect with him previously, and surely enough, he wrote back to me with an interest in meeting. In this scenario, it was by making myself vulnerable that I showed him my humanity, and he responded in kind. Content that people write is ripe for good, genuine connections. A personal blog is one thing, but oftentimes people are also writing professionally about subject matter that is relevant to their work, or even for volunteer work that they do in their personal time. For example, I am a volunteer in the Big Brother Big Sister program. People who participate in that program have a dedication to mentorship and serving underrepresented communities. That alone is a great reason for connecting with someone who participates in the same program or has undertaken any other sort of commitment to mentorship in their lives. Or if that individual has contributed thought leadership for a publication like the Harvard Business Review, you might find some meaning in what they had to say and explain to them why it resonated with you and why it makes you hopeful that a conversation could be mutually beneficial. Now, it is one thing to have a good excuse to reach out to someone and to share that with them. But once you have made your excuse, you need to have a compelling reason why you merit their attention. And that is where the Value Proposition comes in. #2: The Value Proposition A value proposition is exactly what it sounds like – the proposed value that you are bringing to a prospect. The best value proposition should really be short and sweet. You often hear the term “elevator pitch” and you see competitions where people have to give elevator pitches in a very short amount of time. This is intentional. If you are unable to explain what value you can add succinctly, it probably means that the value you add is nebulous or confusing, because otherwise it would be easy to explain. Moreover, people have short attention spans, so you really need to cut to the chase when explaining what value you can offer First though, let’s make sure we do not make the most common mistake that I have had to correct within my own ranks. A huge mistake that I often see is people getting so wrapped up in their “excuse” to reach out, that they forget about it for the rest of the email. They might say something like this: > Dear So and So, Your recent article on the bureaucracy of procurement processes really caught my attention because I have long held the same beliefs. Thank you for being a voice of reason. I particularly liked the part where you called out how the best vendors are often not selected as a result of this bureaucracy. I am reaching out to you because you are the Head of Procurement at XZY Company. We sell a product that eases the burden of onboarding new vendors. Let me know if you are open to catching up next week to brainstorm about this. Sincerely, Learning Sales Rep If you cannot spot what is wrong with this message, that is because it is quite subtle: there is no connection between the first and second paragraphs. The writer goes from discussing an article to immediately explaining why they are reaching out to the person and what they are trying to sell to them. It almost makes the first paragraph look disingenuous, because the “personal” part of the email is immediately discarded in lieu of a straight up sales pitch. Fortunately, it does not take much to fix this. It would be as simple as using this transitional sentence: “Because you seem very interested in figuring out ways to make the procurement process easier, I thought it would be a good idea for us to connect and brainstorm about our product, which does X, Y, and Z for you.” As long as you are giving a reason why your excuse somehow ties to your value proposition, you are golden. But if you suddenly forget your excuse in the interest of jumping right into your pitch, it will leave the recipient wondering about the relevance of your excuse if not for anything other than to indicate you have some things in common, which might have nothing to do with the conversation the individual is trying to have with you. With that being said, I do think the transitional sentence I proposed above is highly effective because it also subtly puts the reader in a position where saying “no” might not be in accordance with their stated goals. If someone has gone out of their way to publicly criticize a specific problem and you reach out to them stating that you are reaching out precisely because of their criticism, it puts the reader in a position where they feel compelled to respond. Certainly when I publish this book and then get bombarded by sales emails about authenticity, I would feel like a hypocrite to tell those salespeople to go pound sand. Working this type of language into your value proposition as a quasi-excuse or transition phrase can be a small but highly effective maneuver. The scope of the value proposition depends largely on what you are selling and what industry you are in. For the last seven years, I have been selling into a very niche industry against just a couple of competitors. Generally speaking, my audience consists of people whose job largely revolves around understanding what vendor solutions are out there. My value proposition can be fairly high-level and straightforward – “we are one of the vendors doing this very niche thing and I do not believe we have had an opportunity to meet before, so let us know if we could connect.” Unfortunately, for most people it is not so simple. But that does not mean that the solution is much harder. My high-level thesis is that the value proposition should be 1-2 sentences, 3 at most, it should tie the excuse into it in some way, and it should speak mostly in terms of measurable outcomes or “whys.” What are those? Well, outcomes are fairly obvious. These are the things that happen for the customer when the customer buys your product. Measurable outcomes assign some sort of specificity to the outcome – like saying “we will triple your revenues” versus “we will increase your revenues.” A “why” is actually not an outcome at all – it’s just an explanation for why you and your company care about this problem and why you want to help. Why is the “why” important? For all of the reasons we have already discussed. People get onboard with ideas if they feel commonality with those who share the ideas. If you are selling a customer experience product to a customer experience professional, chances are, that customer experience professional is passionate about customer experience. What better way to establish commonality than to explain why you, too, care about customer experience? Now that we have established how the Value Proposition works, let’s go back and re-work my email from a moment ago. Here is what it might look like now: > Subject: Your article in Procurement Magazine Dear So and So, Your recent article on the bureaucracy of procurement processes really caught my attention because I have long held the same beliefs. Thank you for being a voice of reason. I particularly liked the part where you called out how the best vendors are often not selected as a result of this bureaucracy. Since you are so passionate about innovation in the realm of procurement and making life easier for procurement professionals, I was interested in brainstorming with you over our new solution. We are seeing a 3x increase in efficiency in private betas for procurement professionals and it would be an honor to get your feedback. Let me know if you are open to catching up next week to look at this. Sincerely, Improved Sales Rep This hits the formula perfectly: subject line that is impossible to ignore, establishing commonality, transitioning that commonality into a compelling value proposition with measurable outcomes, and an easy call to action. #3: The Ask Let’s be honest – you are interrupting someone’s day because you want something from them. To be fair, you must feel that they stand to benefit from spending time with you, too. You are not going to get that time unless you ask for it. The ask is relatively simple compared to the other concepts we have covered in this chapter. Take a sentence and ask for whatever it is that you need. Because most conversations I have with customers are really brainstorming sessions, I like to use non-threatening language like “it would be great to brainstorm with you” or even the more ‘sales-y’ but still less threatening “let me know if I could introduce the concept to you.” Regardless, I think one of the most important things you can do when asking for something is letting the person know that you are OK with them saying “no.” It is often taught in sales trainings that you should not introduce objections to customers, and while I think that is often true, I don’t see the harm in showing a customer that you are not going to be pushy. I like to close out many of my messages with something like this: > “Let me know if you are open to brainstorming on this idea with me next week. If it’s not your cup of tea, I understand.” When it comes to the examples I have used in dating, I realize that my example above does not necessarily hold water. It can be a turnoff for people to appear to be lacking confidence. For example, you are unlikely to ask someone out on a date with the caveat that you would be understanding if they rejected you. But people that you ask on a date for the first time are oftentimes not people that you know very well. And quite frankly, if you did know them well, you would be likely to add the caveat, “I’d understand if you said no, because we are such good friends.” Really, giving an “out” to someone is the same exact way you would treat a friend. You would not bully them into accepting your idea – you would let them know that your friendship will still be intact even if they disagree with you. The same is true here: ask for what you want but show the person that there is much more to life than whether or not they take you up on your offer. One thing I really try to avoid in my cold outreach and really in all of my selling is looming deadlines. This is an artificially-imposed deadline on someone meeting a call to action. Generally speaking, looming deadlines hinge around pricing, e.g., “If you buy our product in the month of September, it will be half off.” This is gimmicky because it is not authentic. It is gimmicky because it is what car salespeople do to you and honestly half of the promotional emails in your inbox – which we have established can be used as a rule for what not to do – are probably employing the same tactic. When you are having a serious conversation with a close friend or family member and recommending a certain course of action to them, you probably would not tell them they need to take your advice immediately or risk everything. Realistically, you would only do that if there was actually a compelling reason to do so. In traditional sales settings though, the looming deadlines you experience are rarely motivated by real timing hurdles. They are almost always motivated by someone who needs to bring a lot of revenue in the door at a certain time. When your favorite retailer has a sale, it is not because there is something about the given month that makes it more affordable to them to sell you clothes. It is because they know that offering you a looming deadline has an effect on human psychology. Now, I know what you’re thinking. Something like, “Jeff, you already told us you were an English major in college and that you know nothing about psychology. Why should I listen to you when every marketer in the world does this stuff?” Well, that is because people who market en masse are very different than people who market in unique business-to-business settings. If you work for a business-to-consumer company (think Amazon, or any large retail brand), looming deadlines will probably be effective for you, so go ahead and disregard my advice. However, if you sell large enterprise contracts like I do, the people you are dealing with are much more likely to see through your nonsense and feel that you are trying to rush a process that takes time. I recently moved forward with a vendor who offered me a looming deadline. I did not like that they had a deadline on their pricing, but they told me that they were raising money from investors and trying to bring in as much revenue as possible to help with their valuation. The more revenue they could show to the investors, the less dilution of their stock they would face. I believed them, and I signed up for their product. Surely enough, weeks later, they announced their Series B fundraising round. Here is the moral of the story: if you are going to use pressure tactics to try to bully someone into a sale, at least be genuine. I have been honest with my clients about why I ask for things when I ask for them so that they see that my demands are coming from a place of authenticity and that they are not borne out of just trying to close a deal. If people are made to feel in your outreach that any urgency you have is legitimate, they will act in kind. However, if they are made to feel like you’re just trying to push them, they will also react in kind (i.e., not kindly) to that. It is probably self-evident how these principles can be applied to everyday situations. My cold outreach method is useful when you are reaching out to anyone for the first time about anything it is that you desire. It could be valuable in reaching out about a potential job opportunity. It could be valuable in reaching out to a college admissions counselor. I suppose it could even be valuable for people who are looking for a better opening line on whatever dating app they use. But whether you are sitting behind a computer or not, the same principles hold true: try to remember the humanity of people around you and appreciate others for their own authenticity. Try to connect with them in a personal way and you will be pleasantly surprised by the results. Jeff Kirchick is Vice President, Enterprise Sales and an early employee at Next Caller, a Y-Combinator backed technology company that sells authentication and fraud prevention technology to Fortune 500 brands across the United States. He has had unparalleled sales success for over a decade and enjoys the opportunity to help mentor and coach younger sales professionals looking to get their start. He is a big believer in saying what you have to say whether it is going to be popular or not. You can find Jeff on LinkedIn [https://www.linkedin.com/in/jeffkirchick/] or his website [https://jeffkirchick.com/].
How to
Avoiding Delegation Downfalls
Daniel Jakaitis / 4 months

Avoiding Delegation Downfalls

Once or twice a year I’ll go through a phase of extreme delegation to cope with the demands of startup life. I make long lists of my worries — responsibilities, systems, activities, even relationships — and ruthlessly brainstorm how to hand them off to someone else. Channeling Marie Kondo, I insist that I don’t have to do anything that doesn’t bring me joy. Unfortunately, that’s not how life works, and my master plan of delegation fails. Still, delegation is crucial to managing well [https://hbr.org/2017/10/to-be-a-great-leader-you-have-to-learn-how-to-delegate-well] . If I can’t get off of the hamster wheel of doing, I may miss the big picture. Here are the mistakes I’m trying not to repeat. Delaying delegation too long My responsibility purge is usually triggered by extreme overwhelm [https://blog.prialto.com/i-know-i-should-be-delegating-to-save-me-time-but-i-am-just-too-busy-to-figure-it-out] . If I’m not careful, I will listen to the overwhelm telling me that delegating will be more work than doing the work myself. That may initially be true, but it will also mean that I can never get out from under my own task list to see better ways to do something or to grow. To determine whether a task may be a good handoff candidate, I’m asking the following: * Does the task consume a disproportionate amount of energy? Every Thursday, I need to duplicate and distribute a team presentation. It seems too insignificant to put on my to-do list every week, so I rely on myself to remember it unprompted each Thursday afternoon. I could put a calendar reminder for it, but then someone will schedule a meeting during that time, and I’ll miss the reminder. I clearly spend too much energy thinking about this and need to hand it off. * Do I actively dread the task? Laundry is my nemesis [https://www.theatlantic.com/health/archive/2018/12/ill-do-it-later/578173/], and I will strategically plan outfits to avoid doing it for as long as possible. It wasn’t until Dan suggested having someone else do it that I first glimpsed freedom. In fact, that someone else may even do a better job and get joy from it. I waited so long to consider delegating this one that I almost forgot that escape is possible. * Does the task specifically require my voice, face, writing, or knowledge? Some days at an early stage company can feel like everything is waiting on me. Truthfully, very few tasks probably do, but that’s not what my ego wants to hear. Vacation days are a great reminder that the company can survive without me. When I start to dread a day off, I know that I’m handling too much. Handing off the wrong tasks In a typical week, I check out five or so books from the library. When I first hired an assistant, I created an elaborate system for them to log into my accounts, pull books from my reading list, and send them to my Kindle or local library branch. My goal was an endless stream of interesting reading. The result was far from that. I became overwhelmed by the pressure to read and unhappy with the mix of books being selected (even though they were pre-selected by me!). Reading became a chore rather than a relaxing pastime. I realized that I craved books related to the events of the week, and I missed perusing the shelves myself. I had handed off something I loved for the sake of creating more time to do the things I love. Startups pull us in multiple directions, and it can be hard to remember what we love about our jobs. Be clear about why you’re delegating and hold on to the activities that bring you joy [https://marissabracke.com/dont-delegate-what-you-love-doing-delegate-what-supports-you-doing-it] . A shorter to-do list is only wonderful if the remaining items don’t make you want to quit your job. Dictating process rather than outcome [https://knowyourteam.com/blog/2018/04/30/delegate-outcomes-not-activities/] Another hard concept for my ego to grasp: my way isn’t the only way. So I let my assistant set up appointments for me however she deemed fit. When I looked back through my sent mail, I noticed that she had started each of her emails with “Good day to you.” Not what I would have said, but she still achieved the outcome. Delegation requires trust [https://swipesapp.com/blog/delegation-and-trust-team-productivity], and trust is earned. Start off with small outcomes and work towards higher stake assignments. You’ve made hires for a reason, so use their brainpower and past experience to figure out the “how” for themselves. Letting someone else think through a process and execute on it means the method may be different from mine, and we both end up learning something. Put in the time to delegate the right tasks to the right people before you become overwhelmed. Then they can write articles like this for you. (Or so says my delegation fantasy.)
How to
Summit Your Goals
Daniel Jakaitis / 4 months

Summit Your Goals

Building a startup is like climbing a mountain. Except this mountain has no trails, so you can only use your best guess to reach the summit. Every startup will have a different set of peaks to climb, but planning and strategizing are important to reaching the top, no matter the specific goal. In planning your 2021 goals, start by answering three questions: 1. Where do you want to be in 12 months? 2. What are the metric(s) of success? 3. How do you get there? To get the most value out of goal setting for your startup, be flexible, measure along the way, and check in on your progress at clear intervals. Create Anti-Goals “Invert. Always Invert” - Charlie Munger [https://www.biznews.com/thought-leaders/1986/06/13/charlie-mungers-speech-to-the-harvard-school-june-1986] Startups face a hazy, treacherous path from the start. Most of the time, it can feel like we are struggling to see only a few days or weeks ahead, let alone 12 months. Because early-stage companies cannot be sure of what the coming months will look like, it can sometimes be more practical to approach goal setting by developing anti-goals. By inverting the problem of long-term goal setting, your team will mark out where they don’t want to be and work backwards. > Some anti-goals may include: * Not having a product in the market by EOY * Not having closed any sales * Having fewer customers than you have today * Failing to raise your next round * Losing a key employee(s) Mark out clear initiatives that prevent you from ending up where you don’t want to be. It could be something like setting as many prospecting calls as possible over the first few weeks of the year. Or, maybe it's breaking down all the product features needed to get you to an MVP and entering them into your project management software. Or perhaps it's having thoughtful 1-1s each week with your key reports and getting it on the calendar today. With a sense of what needs to be done, next establish a cadence and system to keep you in check. 1 day, 1 week, 1 month, 1 quarter, 1 year. Using time segments to establish goals forces you to be realistic. Annual revenue goals follow from quarterly revenue goals, which in turn follow from monthly prospect appointment goals. If you have a plan to increase your revenue by $2,000,000, set a quarterly revenue goal of $500,000. To achieve that quarterly goal, back into how many sales meetings will need to be set per month. Using these time-based stair-steps, create secondary checkpoint goals to evaluate success along the way to your annual goals. Melanie Perkins, CEO and co-founder of Canva, has a weekly goal setting meeting with her leadership team [https://www.33voices.com/posts/how-to-set-and-achieve-your-startup-goals]. This helps set targets for the current week based on the goals for the  quarter or year. Using this idea, schedule a weekly meeting with stakeholders to course correct from the previous week. Similarly, schedule a monthly review meeting to zoom out and ensure you are on target. Use a Compass. Travel certain trails in the Adirondacks, and you will notice colored markers nailed to trees every 200 feet. These markers help you correct course as you hike. To have the same for your startup, lay out the markers to success before you begin your journey. To ensure success on our journey, first formalize what KPIs are tracked to evaluate success and then set recurring monthly (or weekly) meetings to review with the broader team. If you're still determining which KPIs might be right, look through some of the examples we put together. [https://www.notion.so/Startup-KPIs-to-Track-bd38b695c93b444ebc1e819143c543ec] At each meeting, evaluate and adjust your path. If you set a goal of 40 customer development meetings this month and blew past it, maybe it’s time to revise your year end goals upward. As you work towards your annual goals throughout the coming year, keep in mind that the map is not the territory [https://fs.blog/2015/11/map-and-territory/]. Even the best laid plans are merely abstractions of the reality they are intended to represent. Be vigilant in constant re-evaluation of the goals set for yourself and your team. In your meetings, constantly question your assumptions to ensure you don’t look back in 12 months and ask yourself how you missed your goals by so much. Armed with this process to navigate your journey, you will be prepared to start the climb to the peak.
Q&A
Defining Your Brand Identity
Daniel Jakaitis / 4 months

Defining Your Brand Identity

Aja Singer [http://www.ajasinger.com/] is the former founding Creative Director at Of Mercer [https://www.ofmercer.com/], where she helped grow the brand from its initial concept into a multi-million dollar company. Prior to that, she was a cofounder of womenswear brand Alex & Eli, responsible for brand strategy and visual identity. She currently runs a branding-focused newsletter, For the Love [https://ajasinger.substack.com/people/6528929-aja-singer], and helps companies with creative and brand strategy. To chat with Aja about your branding needs, book time with her here [https://calendly.com/ajasinger/30min]. You’ve been the creative force behind two early-stage womenswear brands - what did you get right and wrong with each? With my first brand, Alex & Eli, I really pushed myself from a creative and business perspective -- trying out new things and experimenting to see what worked and what didn’t. I’ve tried to carry that attitude through to all of my startups. The mistake I made was listening to advice from too many people. > Just because someone has extensive industry experience does not mean they know what’s right for your business. With Of Mercer, I really prioritized getting to know our customers and having an ongoing dialogue with them through emails, surveys, phone calls, and even in-person consultations. This gave me huge insights into their lifestyles so I could better serve their needs. I’d recommend this to every founder, even before they have a product to sell. What does a good startup branding plan look like? Branding encompasses so much more than just a font or color; it’s the soul of a brand. First, you need to understand what the brand stands for, it’s value proposition, who it’s serving, and how you want your customers to feel when interacting with it. The visuals and messaging are a reflection of those ideas. To get started, I recommend going through a few branding exercises with the whole team. A brand expert can take you through them, but if you’re looking to nail down your brand before you’re able to partner with one, it’s ok to work through them on your own. Start by defining your perception of your brand, your customer, and what your brand stands for.  A great way to do this is to give everyone post-it notes (which you can also do virtually with a tool like Figma) and have them write down words they associate with each category. This allows you to quickly see where thinking is aligned and where you need more clarification. By narrowing these words down to three per category, as a group, you’ll have a good initial understanding of your brand and customer. When I work with clients, I’ll walk them through this series of exercises. Once the core identity of the brand is defined, I take a similarly collaborative approach to developing the visuals. We’ll discuss what colors, fonts, and aesthetics team members are drawn to, other brands they like, and brands they don’t, and talk through a number of other visual cues until we’ve all agreed what form the brand should take. I’ll then create a few options to discuss, experiment with (to make sure they fulfil all the needs of that particular brand), and fine-tune, until we’ve defined the visual identity. When should startups decide on their branding? All the branding elements should be fleshed out very early in a startup’s lifecycle -- a thorough understanding of them will inform every aspect of your business. As for the brand’s visual identity and voice, having this clearly defined and articulated shows potential customers what you offer and what you stand for, which is especially beneficial for direct-to-consumer (DTC) brands. As a DTC startup, branding is the only way to convey your message and value proposition to customers, so it’s crucial to have that fully realized from launch. What should go into that decision process? I usually start with the series of exercises mentioned above. From there, it’s an ongoing dialogue and refinement process, getting to the core of what a brand looks and sounds like based on those defined core tenets. > For an early-stage startup, when things are changing quickly, it’s best to revisit your brand identity (especially the voice and messaging) every six months or so to make sure it’s aligned with your business goals and trajectory. As for an entire re-brand, you should consider it when hitting other milestones, such as a high-impact sales target, or a new round of funding. This generally means your business has had meaningful growth, and your brand identity should evolve along with it. What tools do you use with or recommend for your clients? If you’re just starting out, a shared Pinterest board is honestly a great tool for collecting inspiration. Once you’ve honed in on a few themes, you can collect them in Figma [https://www.figma.com/] (which is fantastic because it’s collaborative) to further define the vision. And if you’re looking to translate your ideas into a logo, Upwork has some cost-effective graphic designers. However, if you aren’t working with a branding expert yet, make sure you’ve clearly defined your brand so that any freelancer you work with thoroughly understands your brand’s identity. Has your creative process changed now that meetings are mostly remote? My workflow has not changed that much (although I do miss in-person meetings). What has changed is that I used to gather inspiration from all the cultural activities available in NY, so I spend a lot more time exploring online now. I miss the serendipity of wandering around New York -- seeing new things and meeting new people with new ideas, but there is still so much available online. Social media is a fantastic resource (I check both Instagram and Twitter regularly), and I subscribe to a number of mailing lists and newsletters for the purpose of discovery. I love Sight Unseen [https://www.sightunseen.com/subscribe/] (for all things design), Thingtesting [https://thingtesting.com/] (for new brands), Typewolf [https://www.typewolf.com/] (for font inspiration), to name a few. What inspired you to start your newsletter [https://ajasinger.substack.com/people/6528929-aja-singer] and how did you get your first subscribers? Truthfully, I wanted to get some practice writing regularly! Also, during my time as a founder and while in the e-commerce space, I had thought a lot about startups, branding, and consumer trends but hadn’t had the opportunity to share that knowledge. A newsletter seemed like a great way to do that. The first few issues went out to around 100 subscribers. I told everyone I knew that I was starting a newsletter and it just grew organically from there, with people sharing with friends and on social media. Writing the articles is definitely a lot of work, but I really enjoy diving into topics that I’ve either thought a lot about, or am curious about. Knowing that founders and marketing and brand professionals find it helpful makes it all the more rewarding. Which companies do you think are getting branding and messaging right? Apple and Nike are incredible examples of brands that have a clear, concise brand vision that’s consistent, yet effectively adapted to every brand touchpoint. As for startups, I think Pattern Brands [https://patternbrands.com/] has done a fantastic job at taking a belief system (enjoying daily life) and building a family of brands around it. And I love Starface’s [https://starface.world/] brand and incorporation of their mascot, Big Yellow -- it’s bringing a fun, welcoming and judgment-free attitude to the skincare space. What have you been reading lately? I read the New York Times and New York Magazine religiously, and I just started reading two books — The Vanishing Half [https://www.amazon.com/Vanishing-Half-Novel-Brit-Bennett/dp/0525536299] by Brit Bennett and Atomic Habits [https://www.amazon.com/Atomic-Habits-Proven-Build-Break/dp/0735211299] by James Clear. What’s a great piece of advice you've received? Don’t overthink it. (Although I usually still do!) How do you unwind these days? Yoga (especially Sky Ting [https://www.skyting.com/]!), going for walks with my husband, and reading. Hopefully I’ll be adding travel back to that list sometime in the future!
Finance
Become a Financial Quarterback
Daniel Jakaitis / 4 months

Become a Financial Quarterback

As the CFO of YipitData [https://yipitdata.com/], Eric Lesser has to have a quarterback-like vision on his company's financial health. Eric manages the finance and accounting teams to help the company financially strategize for all ongoing and new initiatives. His work cuts across the organization's different teams and is the linchpin to maintaining Yipit’s explosive growth. Prior to joining YipitData, Eric was the VP of FP&A and Corporate Development at Payoneer. There he helped lead several venture [https://techcrunch.com/2016/10/05/payoneer-raises-180-million-for-its-global-payments-technology/] rounds [https://www.businesswire.com/news/home/20140305005995/en/Payoneer-Secures-25-Million-Funding-Led-Investor] as part of the internal Corporate Development team. Having joined Payoneer in mid-2012, Eric watched the company transform from a relatively successful early stage venture to a global player in the payments space. Give me the FP&A 101 for startups - What does it mean? What are the work products of someone in FP&A? What are some different calculations or metrics typically used? FP&A’s main goal is to provide insights to help business managers make informed decisions. What does this mean in practice? While each FP&A team will have different responsibilities, there are more standard FP&A work products, and ad-hoc analysis that will depend on the company and change as the company scales. Some of the more standard work products can include forecast models, budgets, board reporting, unit economics and KPI monitoring, and other ad-hoc analysis. To dive a little deeper into a standard work product, FP&A is typically responsible for creating a multi-year forecast for the company.  In order to do this the FP&A team needs to understand the drivers of the business’s revenue and determine what revenue can realistically look like a few years out and the resources needed to get there. As an example, FP&A might first look at the business and come up with a reasonable assumption of how much it will grow based on historical trends.  From there maybe you layer on how much new sales the business will do based on the productivity of the sales team.  If you want to grow, you might add more salespeople, but then FP&A will need to understand how those new people increase costs – for example, you might need more office space, or maybe you need more people in HR to recruit them, etc. So, it’s really about seeing the entire picture and coming up with a coherent logical story for what the future might look like. When should startups begin thinking about implementing an FP&A process? What initial steps do you recommend a growing startup take to make sure they stay financially healthy? Businesses would benefit from having a more structured FP&A process once they are in a stage where they need to allocate financial resources and prioritize among different investment decisions. > When a startup is early, and just trying to build and market a single product, it’s a bit simpler; you need to budget your cash, of course, but you aren’t deciding between multiple competing different investment opportunities that you need to evaluate separately.  Then you might reach a phase where you are growing super quickly and don’t really have time or a need to think about FP&A. But once you are in a place where you could either invest in sales, product team or marketing it becomes worthwhile to add some more structure since you will need to figure out which is the best investment and what you can afford. At its best, FP&A helps the business understand the trade-offs of investing in one area versus another. On top of that, FP&A will be able to show you, with some reasonable accuracy, how much revenue the business will be needed to pay for those investments. Then, as a result, how much cash will be generated or, more likely for a startup, how much additional cash you will need to support the business. Modeling can be a bit of an art - what factors go into your modeling process at Yipit? I definitely agree with that statement.  We are certainly doing a lot of analysis for our models and are being as scientific as possible, but at the end of the day when modeling you are basically trying to predict the future and there are a lot of unknowns. At YipitData and at Payoneer, our modeling process was somewhat similar in the sense that we differentiated between our existing products versus new opportunities. The existing business is much more predictable; we take a few different approaches but one way that we have seen some success in the past is by looking at the trends on a cohort basis and using that as a way to determine what the next few years might look like. For example, we might look at products we launched in 2018 and see how those products scaled up in 2019 and 2020 and compare that to 2019 new products launched and the performance in 2020.  From there you can potentially identify some patterns that will help you determine what a realistic number in the future might be depending on a range of factors. How is this different for new products vs existing products? For new products, you don’t have these historical trends to analyze, and that’s when it can become much more of an art.  So there are a few different approaches here: you might try to figure out a similar product that was launched before and expect a similar result, or you might do more of a top-down market sizing analysis where you estimate how big the potential is and come up with a reasonable number for how many customers you can acquire over time. For both existing and especially new products analysis is the key to putting a strong model together, but at the same time an effective FP&A team really needs to understand all aspects of the business.  So, you’d want to work with product and sales teams to understand if the assumptions you are using are reasonable, and if not, why not. And once you have the model built, it’s really important to track actual results versus expectations so that you can learn about how to adjust in the future. Who are the stakeholders when it comes to FP&A at Yipit? As CFO, what is your process for dealing with everyone and making sure everyone is aligned? The FP&A team is really only as good as the inputs we are getting from other parts of the business.  The reason for this is that the numbers and financial analysis are very important, but numbers will only tell you part of the story when trying to understand prior performance and what it means for the future. > In order for FP&A to be effective, you really need to understand the business, which comes from building relationships with others outside of finance. That should really include all departments, such as sales, marketing, product/technology, operations, HR, etc. The tricky thing here is that managers of these departments are usually very busy running their respective areas of the business, and it’s a meeting with FP&A can be seen as unnecessary bureaucracy that slows things down. In order to combat this, I’ve found it’s really useful to not only use these meetings as a way for FP&A better understand their areas of the business but also to demonstrate the value of what FP&A can bring. A few ways to do this include proactively sharing analysis that can be insightful and interesting to them, explaining why the information is needed and how we are positioning the company to the Board, and finally and most importantly really positioning the FP&A/manager relationship as a partnership that will help us justify investment in whatever they want to achieve. This doesn’t happen on Day 1 and takes time, but it can be tremendously helpful in getting the alignment needed.  It requires an FP&A team that is not only good at number crunching but at explaining numbers on a high level to people who are not used to seeing them every day. What other types of finance or accounting processes are in place for a team the size of Yipit (team wide, individual) and what is the cadence of reviewing these? We will end the year with just over 170 employees, up from 115 earlier this year.  We’ve been fortunate to grow despite the difficult circumstances that everyone faced this year with COVID-19. Some of our major processes include: * Budget – this kicks off in September and finishes toward the end of the year.  It involves first getting a sense internally of where the business is likely to end up from a revenue / cash flow point of view, and then deep discussions with each manager to determine what are some of the new initiatives we will want to focus on in the next year and projecting how much they will cost and the potential return on investment. * Budget versus actual analysis – the next step once the budget is approved is to share a file with each manager on a monthly basis to demonstrate what their expenses were versus the budget. This gives them clear insight into how things are tracking.  I tell the managers that while we do want to monitor expenses, the best thing that could happen is if we find some sort of investment that is working really well, and we want to increase the budget for that expense. This is a great opportunity for us to better understand what is happening in each department and what they are focused on and why. * Board of Directors presentation – our Board of Directors has monthly calls and quarterly meetings, for which the FP&A team is responsible for putting together analysis charts and KPIs to demonstrate how the business is doing relative to expectations and why. * Monthly financial close – we report our financials on a monthly basis and each month kicks off a 10 day in depth process to close our books and report accurately * Monthly meetings with teams – The FP&A team meets with other teams outside of the budget process on a monthly basis to both share analysis and learn about what is happening in other areas of the business.  The more we can understand the business the better we are able to analyze and forecast * Distribution of a KPI dashboard – this is a process we are just starting now on a monthly basis but at Payoneer it was more frequent. What tools does your team use? How do you anticipate your toolset changing as your team grows? On the FP&A side, our primary tool is Microsoft Excel / Google Sheets.  This has its limitations but gets the job done.  Over time I believe we will implement a Business Intelligence system for analysis, such as Tableau, plus a FP&A tool for budgeting such as Adaptive Insights.  The issue with tools like this is that it takes a lot of attention and time for the team to implement them in the right way, and since we have a relatively lean team, that’s not something we have prioritized. Also, when you are a fast-growing company, your financial projection model may change from year to year. I’ve found it’s fastest to update and modify the underlying logic in Excel versus building out in a software tool. On the accounting side, we use QuickBooks but over time may migrate to another ERP. When do you think startups should hire a full-time CFO role? I think hiring someone at the C-level should be after a couple of rounds of funding and real traction in the business.  This can really vary by company but for the sake of simplicity let’s say at a minimum reaching Series B funding round, and on a run rate of $10m+ revenue. Prior to that a start-up may go two different directions – hiring a couple more junior people (controller/FP&A) or start with a VP level who can build out their own team over time.  I’d suggest going the VP route because you’ll find someone with a bit of experience who can manage a team and is still willing to do all of the financial modeling and other difficult analysis work required, while they work to get their first couple of hires. And if you’re lucky maybe this VP is able to eventually scale to the CFO role over time and if not, then you can hire that more senior person later on. More broadly it seems like there’s two types of CFOs that companies can look at – those with a lot of accounting expertise and those that came more from a FP&A background and can be more of a strategic business partner.  In my own experience I see more start-ups aiming for the latter these days, but it really depends on the company’s needs. You have helped fundraise hundreds of millions of dollars - What was your role in these rounds and what are the challenges for finance teams in handling deal sizes as large as those you saw at Payoneer? At Payoneer I was responsible for FP&A and what we called Corporate Development, which included Capital Raising and M&A.  During the capital raise processes (I was there for a Series D and Series E) we did not use investment bankers which meant our team’s role was pretty intensive. First, we had to prepare the presentation for the initial management meeting with investors, and from there to basically manage everything afterwards.  After the initial meeting the investors will ask a ton of questions about the business and financials.  Our team was responsible for putting together all of the analysis that answered these questions and walking the analyst on the investor side through them and getting them comfortable.  We also were responsible for leading diligence which meant putting a data room together and coordinating with all of the other managers in the company that needed to answer specific questions. We had to work with the legal team to make sure the documents were in order and managed most of the investor communication during the process. I’d say the capital raises took up around 80% of my time while they were ongoing, which was the biggest challenge, since at the same time there were so many other things we had to do to support the business that we didn’t want to put on pause. Having a banker would help alleviate some of that work burden, but at the end of the day this is time really well spent for a FP&A team and is very rewarding and motivating if you get a deal done. For the non-finance managers and founders, what resources would you recommend learning about the field? For someone who is non-finance I think it’s important to just understand a bit more about how investors think about start-up businesses versus getting into the details of finance or accounting. > In the early days, you can outsource the accounting and finance related work before you get your first hire, and there are a lot of people out there you can hire to do that on a part time basis. A great resource is AVC, a blog written by Fred Wilson [https://avc.com/]of Union Square Ventures, and also Paul Graham [http://www.paulgraham.com/articles.html] has a great blog. I also like the Axios (Dan Primack) [https://www.axios.com/authors/danprimack/] and Term sheet daily newsletters [https://www.axios.com/newsletters/axios-pro-rata] which talk about what companies are out there getting funding and some of the more pertinent start-up business/finance related issues that will help get you to understand the VC investor point of view a bit better. Finally, I’d recommend just talking to CFOs/VPs of Finance in your network to learn about some of the issues that might be important in the near term. What have you been reading lately (articles, books, specific writers etc.)? I just finished the book Traction: Get a Grip on your Business [https://www.amazon.com/dp/B007QWLLV2/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1] , which is a great read to help think through some of the issues as you scale businesses. On the non-business side, I’ve been into autobiographies recently and really enjoyed Kitchen Confidential [https://www.amazon.com/Kitchen-Confidential-Updated-Adventures-Underbelly/dp/0060899220] by Anthony Bourdain. What startup(s) are you paying close attention to at the moment? It’s not a startup, but I love Tesla and am fascinated by anything Elon Musk is working on. I also follow some of the fintech companies since I spent over 7 years at Payoneer – it’s been amazing to see the growth of companies like Stripe recently. Favorite activities during your down time? I love to travel and most recently was lucky to see the mountain gorillas in Rwanda a little over a year ago.  My wife and I also love going to new restaurants in New York and while that’s slowed down by COVID-19 we try to support them by doing outdoor dining when we can. I’m a huge fan of playing sports and have been playing a lot of tennis recently.  I also play in a men’s basketball league one day a week but that has been on hiatus due to COVID-19. If you are interested in reaching out to Eric, find him on LinkedIn here [https://www.linkedin.com/in/eric-lesser-01a6b917/].
Operations
Passion Behind the Hustle
Daniel Jakaitis / 4 months

Passion Behind the Hustle

Ravi Sharma, CEO of OOTify [https://www.ootify.com/], joins us this week. Ravi has had two successful exits in healthcare and clean technology and has incubated and invested in numerous technology startups through his family office, iBOS Ventures [https://www.ibosventures.com/]. Ravi was one of the youngest portfolio managers at Western Asset Management Co. and was personally responsible for approximately $1.3 billion in assets on behalf of sovereign wealth and institutional clients. OOTify (Hindi meaning - "lift-up") is a clinically data-driven mental health services ecosystem that uses educational content, predictive triage analytics, and enhanced telemental health services to empower clients to find the right approach to improve their mental wellness and easily get high-quality therapy. The company is founded by serial healthcare entrepreneurs [https://www.ootify.com/our-story] with successful past exits and who have experienced the personal impact of the mental health epidemic. Having lost two family members and a dear friend to suicide and after navigating the fragmented healthcare system for years, Ravi decided to build a platform that could solve the structural and systemic problems in our mental healthcare system. We dig into the challenges he and his founding team have faced along the way. You come from a finance background but have built products in the health-tech space (EMR) before. What makes working in health-tech so challenging? Challenges in digital health are multi-faceted, but here are the top two: * Sales Cycle - My first healthcare startup sold electronic record medical solutions into large hospital systems (e.g. Scripps). The sales cycle was very long but each contract value was six figures. If you are able to find champions within these enterprises and deliver a solution that customers love and that has a clear positive ROI impact, you can build a scalable and sustainable business. It also creates the opportunity for a successful liquidity event as I exited this company in 2010. * Competing Stakeholders - In health-tech, you need to solve for the three P’s: Patient, Provider, and Payer. Your technology, content and resource support, and customer service have to bring value to each stakeholder, which is complex. The formula that has worked for us is a strong focus on customer happiness, engagement, uptake (e.g. continued utilization), and improved health outcomes. What type of compliance or regulatory overhead do you deal with at Ootify? How have you navigated these in the early days (knowledge, cost constraints, talent, etc.)? Privacy and security are paramount. When you’re building a digital health-tech startup, you need to ensure that the electronic health information you receive is protected, not just for compliance and regulatory needs, but for trust and to respect your user’s privacy. OOTify takes our users' data security and privacy very seriously as a core value of our company. Health data is sensitive information so ensuring our platform is HIPAA compliant [https://en.wikipedia.org/wiki/Health_Insurance_Portability_and_Accountability_Act] is crucial. Ten years ago this was a manual and cumbersome process. Today, it is much easier to ensure the highest quality of compliance and privacy through third-party providers and auditing capabilities with services, like AWS and GCP. All of our data is encrypted at rest and in transit, which meets or exceeds current compliance and regulatory requirements. At OOTify, we took it a step further because we do not collect or store any therapy session information. We are always looking for ways to go beyond current data security standards, which are already pretty robust, including decentralized ledgers where only the client and provider have token access to their data. This is just one of many ways that we’re trying to find cutting edge solutions to continue to create trust and bring value to users on our platform. With OOTify, you are working on a clinical trial to prove out your thesis around the benefits of subclinical treatment. As a startup with a finite amount of cash, how did you make this happen? It started with a simple introduction from someone I played ping pong with at our WeWork office in Playa Vista. He had a background in psychology and knew the professor at Loyola Marymount who had interest in the field we were working on. I asked for an email intro and pitched OOTify to the professor and he literally was shocked by what we were building. The professor stood up half way through the pitch, went to his book shelf and grabbed a book that he had published in the 80’s, and flipped to a chapter that captured the essence of what we had built. He had thought technology would get to a point where a matching algorithm could help improve health outcomes with therapies and beyond. After a few conversations, we decided that we could conduct a clinical trial with LMU students to test our thesis around the efficacy of short duration telehealth and sub-clinical interventions along with digital phenotyping. We reviewed over 1,000 existing publications to ensure our clinical trial was well researched. During preparation, we had to ensure we were bringing a new hypothesis, a quality study design, willing psychographic participants, an independent principal investigator, regulatory approval with an Institutional Review Board [https://en.wikipedia.org/wiki/Institutional_review_board] (IRB), therapists, marketing, technology, thoughtful subject exclusion criteria and safety protocols, and much more. This work had to demonstrate to universities that our solution was clinically-sound and rooted in proven data metrics. We were able to accomplish our successful clinical trial with a team of in-house clinical expertise and external partnerships. The passion internally and externally allowed us to do what other technology platforms are spending millions of dollars to do. We are proud of the work we accomplished with our clinical trial and humbled by the support we have received from our partners: Loyola Marymount University, University of Southern California, Pacific MFT, and our team, including our ~50 current investors. We were able to complete the entire clinical trial with a few hundred dollars in marketing costs, absorbing the therapy costs internally with our clinical staff and relying heavily on the internal team and our partners. Currently you are focusing on selling to large universities. Why did you choose this audience? What is the sales cycle like and what specific challenges have you faced? We wanted to have the maximum impact with a demographic most in-need and at-risk with their mental wellness - college-aged students. 75% of mental illness onset happens by the age of 24 [https://www.nami.org/NAMI/media/NAMI-Media/Infographics/NAMI-Warning-Signs-FINAL.pdf] . Our GTM strategy is college students because that’s where we believe the biggest need is and how we can quickly reach the largest number of people who could use support. The sales cycle and internal review process for approvals is long, but the ROI of university systems is high. We’ve been able to get the appropriate support necessary at many universities to move the conversation forward with our evidence-based solution. To learn more about the impacts and breadth of mental illness, head here [https://www.nami.org/mhstats]. How are you measuring success at OOTify? Who is responsible for these and how do you process these? We measure our team’s success based on a combination of traditional OKRs and custom OOTify metrics. Sales success is based on revenue growth, and those metrics are driven by customer value-delivery and our expansion strategy into our 4 different customer bases. Because OOTify serves multiple user types, we have to ensure our technology and product, marketing and content, sales strategy, and customer success are effective and clear for each customer. Those user types are: * Mental health providers and coaches offering their expertise and professional services on OOTify’s application * A non-student client user who is seeking mental wellness education and/or therapy or coaching resources from OOTify * University leadership and staff who are partnering with OOTify to improve student mental wellness on campus * A student client user type who has access to their campus and OOTify’s resources through the OOTify mobile app and our online content In order to serve all of our audiences, we have two main approaches. 1. A targeted approach for providers and their clients so they can streamline and grow their mental health or coaching practices on our platform through our technology and better automated processes. 2. A targeted enterprise approach for universities and students where we can customize OOTify’s full array of assets for those school systems. Our sales cycle to providers and mental health and coaching professionals is very short (anywhere from 2-8 weeks) and the internal sales process is straightforward. We deploy direct sales emails from tools like Apollo [https://www.apollo.io/] and run targeted marketing campaigns in our social media channels + partner content and thought leadership pieces, set demos & meetings through Salesforce Inbox and Calendly, track the providers in our Salesforce CRM, project manage our weekly tasks in Trello, prioritize customer issues/new features in JIRA with our development team, and leverage multiple communications channels to stay in sync with all OOTify departments (weekly check-ins, Slack, email, g-chat, text messaging, etc). Our sales cycle to universities is long (anywhere from 6-12+ months), and the sales process is unique to each school.  There are variations in each schools' budget, available resources, and individual needs. We leverage all the same tools mentioned above for tracking and deployment of our sales strategy. To evaluate the success of our offering, university leadership is provided a tailored, de-identified, HIPAA-compliant dashboard to track student engagement and overall mental wellness improvement on campus. University leadership can strategically deploy budget spend based on their students needs. They can track the overall success of the mental health and wellness initiatives by directly evaluating class attendance, better grades, or higher graduation rates, and job placements. As a lean startup, the team wears many hats. We have a business development/customer success rep focused on our mental health and coaching providers. She is a licensed clinical social worker and has the appropriate training and expertise to connect with other mental health and coaching professionals on how they can maximize their utilization of OOTify.  Our CEO, Chief Medical Officer, and COO are responsible for enterprise sales. Our COO leads our enterprise sales strategy and customer success approach. She is the decision maker for our internal SaaS tools and processes, leveraging industry best practices, to keep the team optimized, focused, and organized so the team’s execution meets and exceeds our goals and deliverables. To learn more about the team, check out our site [https://www.ootify.com/our-story]. You have been in the startup world for some time; what is the best anti-advice you would provide startup operators and founders ? Adjust to all the criticism. A well thought out critique is great if it’s something that can inform and challenge you. But that’s where it should stop. Use it as fuel for the fire, take any insight and execute. What have you been reading lately? Traction by Gino Wickman, The Lean Startup by Eric Ries, and Twitter. It’s amazing to see the content you can access from some of the most brilliant minds in the world in real-time from social media. You have to do it in doses, though, for your own mental wellness. What startups are you paying close attention to at the moment? Mindstrong Health [https://mindstrong.com/] and Field Trip [http://fieldtriphealth.com/] - I think they are doing some phenomenal things in the mental health space.
How to
Why You Should Write A User Guide
Daniel Jakaitis / 4 months

Why You Should Write A User Guide

Decisions have always been hard for me, especially when I'm overwhelmed. For example, I break down in front of restaurants because I can't decide if I want to go in or pick a different restaurant. Between working remotely and social distancing, I have spent a lot of time alone this year. The hardest part is needing to make way more decisions for myself. I have to decide when to get up, what to eat, what to work on, and what to do with my free time. Sure, these were largely in my control before, but I relied a lot on social pressure to choose. When I was researching Adam [https://www.linkedin.com/in/aslawrence/] for our interview [https://boringstartupstuff.com/newsletter/mastering-the-art-of-operations-playbooks] , I found his user guide and decided to write one for myself. Both his and the one from the original First Round Review piece [https://firstround.com/review/the-indispensable-document-for-the-modern-manager/] are written from the perspective of a manager, but user guides can be just as helpful for individual contributors. The point is sharing how best to work with you, which is especially important at a time when fewer teams are in-person. I created a template (which you can copy here [https://www.notion.so/thekatieharper/User-Guide-Outline-e3130055035b455bab61c5400e96e66c] ) and then got stuck. Every bullet point represents a decision that I need to make about myself. My startup job requires me to make decisions constantly, and I actually enjoy that process. But I feel entirely different when it’s a personal decision. User guides are essentially a branding exercise, and I worry that I will get called a liar for my choices. I brand myself as a morning person, a proactive doer, and a workaholic. But I’m writing this at night, at the last minute, having spent all weekend not working (though also somehow not relaxing). Are my stories based on truth or aspiration? Decisions also open us up to rejection. By listing my preferences, personality traits, and pet peeves, I’m publishing a quick way to judge me. What if someone sees this and doesn’t want to work with me? Often decisions feel selfish to me. When I decide what time of day I prefer meetings, I feel guilty for prioritizing my own wants over someone else’s. Writing a user guide forces you to confront the stories you tell about yourself. And you have to be vulnerable enough that people will actually learn something useful from reading what you write. A year ago I was in a relationship with someone who never decided anything. Now I see that not deciding was selfish. And I don’t want to be that way. In the end, this piece is my user guide, because it says more about me than a checklist can.
Operations
Mastering The Art Of The Playbook
Daniel Jakaitis / 4 months

Mastering The Art Of The Playbook

Adam Lawrence [https://www.linkedin.com/in/aslawrence/] is the former COO of Bolt [https://www.bolt.com/], an online checkout platform startup that was one of Fortune’s 2020 50 Best Small Workplaces [https://fortune.com/best-small-workplaces-bay-area/2020/bolt/], among other accolades [https://www.bolt.com/press/?category=awards-and-culture]. Prior to that, he started, built, and sold HR company, Liveli [https://angel.co/company/liveli], and was the first hire at Addepar [https://www.addepar.com/]. Adam enjoys building companies from the ground up and is particularly passionate about recruiting the right people for those companies. Check out more of his thoughts on startup operations on his website [https://www.im-asl.org/]. You brand yourself as “a playbook guy” in your bio [https://www.im-asl.org/about]. How did that start? Playbooks started as a crutch for me. I have a bad memory, so if I wanted to get the same outcome for processes, I needed to write them down. This quickly proved useful as we started to scale teams and hire people to do parts of what I owned. Early on in my career, I read The Checklist Manifesto by Atul Gawande and was compelled by how smart professionals could improve their performance through lightweight processes. Air travel is an everyday example of this; we are safer in incredibly complex aircraft than in cars or other transit modalities because of the thorough checklists and processes in place. Like airlines, if you want a consistent outcome in companies, build a checklist or playbook. What’s a playbook that you’re really proud of? I've helped a bunch of startups build and refine their early recruiting playbooks. The default recruiting failure modes are 1) to be super busy with activities or 2) only take who comes from inbound. Both are wrong: the first wastes time and the second limits your talent pool to those actively looking and already aware of your company. At Bolt, I helped grow the team from 15 to 175 by defining the outcomes we wanted and working backwards to build talent playbooks to achieve those outcomes. Our hiring playbook went beyond just the hiring process and included a scorecard articulating not only what would make someone great for this role but also their initial expected outcomes. When applied well, that powered the search process and set the new employee up with clear goals for their first 6 months. Too often, hiring processes are a series of disparate steps that result in a mismatched employee journey, and we wanted more continuity. Where do you get ideas for processes? I’m not smarter than other people nor do I think my experience trumps that of other builders, but I am good at synthesizing complex problems and looking for shortcuts to solve them. Charlie Munger calls this “lattice work” — the idea is that you pick and choose the best of what others have created and apply that to your business. Innovation should be part of the product, not necessarily the business. The first step towards building repeatability is to define and align on the expected outcomes. From there, work backwards to build a hypothesis of how you can get those outcomes. As you prove out that hypothesis, codify the process with playbooks. Lots of people start by building the playbook at the first step; instead, I think it’s absolutely key that you focus on the right outcomes. From there, it’s so much easier to articulate the steps. For further reading, Ray Dalio, Charlie Munger, and Naval all have good principles about it. What’s your process for setting up playbooks when you start at a new company? First, I figure out what I need to do to provide value to our prospective customers. Once we start to see product market fit, I document what’s working well. There’s two reasons for this: 1. It’s much easier to iterate and improve upon a written hypothesis. 2. When you get to repeatability with that hypothesis, a written document (i.e. a playbook) will make it easier to share that knowledge with the next person. In operations, we’re asked to be good at a lot. How do you deal with the parts you aren’t as strong at? You have to know yourself. Self-awareness is key in most roles, but doubly so as a generalist. It’s easy to commit to projects that are outside of your circle of competence when you’re playing a catch-all. When I’m tempted to do that, I ask myself whether that’s the best use of my time and if the company is getting the most out of me in that situation. If not, I figure out a way to either delegate it or ignore it. Delegation seems unnatural to many startup generalists, but hiring a bookkeeper or getting a contract reviewed by a lawyer will free you up to work on higher value tasks. Yes, you’re trading money for time, but you get time that can be better leveraged. As Bolt scaled, I was asked to hire for and own entire departments that fell into this category. The key skill there is evaluating and managing talent. I needed to get great at recognizing greatness and then getting out of their way. What’s your system for staying up-to-date on moving parts across the company, especially when scaling quickly? I broadly look at information in two categories: bottoms up and top down. Top down is easier; I construct scorecards. As things deviate on the scorecard, I dive in to understand the causes and if corrective action is needed. A good scorecard is outcome-orientated but also includes a handful of earlier indicators to help identify problems before they become critical. In practice, this might look like a weekly sync where you assign Red, Yellow, Green to each scorecard metric. When a metric is in yellow or red, you’d also review the cross-function actions that are either underway or planned to alleviate that risk. Bottoms up is harder. I cannot be everywhere, so I need to develop a communication system for identifying and flagging issues. The best way I’ve done this is by creating a cultural norm of stopping the production line when there’s a defect and celebrating the identification and resolution of said defect. This can be difficult because it goes against human nature. As an operator, it’s important to dive in cross-functionally to gather information and assess whether things are moving in the right direction. Well-structured reporting and metrics are great, but having a regular set of 1:1s with a diverse cross-section of team members is key as well. Meet with people who do the work and listen to their concerns — they’re the leading edge of success or failure. What’s a process you’ve figured out the hard way? Every single go-to-market process. Early customers are rarely representative of your later customer mix. It’s often a challenging iterative process to go from early adopters to the middle majority to the laggards, especially when the selling processes and the product need to evolve to do so. It’s never a matter of changing just your sales process. Done well, you need to migrate the entirety of your go-to-market motion. It’s always hard, and there are no corners that you can cut. At Liveli, we ended up completely transforming our process multiple times. We went from self-signup (with a marketing-driven approach) to an inside sales SMB approach, then finally to a key accounts model in which we sold to large accounts and let everyone else self-serve. What startup do you find most interesting at the moment? I think Pipe [https://www.pipe.com/] is really interesting. They're unlocking SaaS revenues and giving people an alternative way to fund growth. I'm also continually amazed and impressed by Stripe because their infrastructure is more expansive than what anybody else has thought of, maybe anywhere else on the internet. They will be the platform for platforms. In your user guide [https://www.im-asl.org/blog/dtotfuqlbpqarf28slhjoh5mqq93pq], you mention that work notifications are limited or off entirely. How did that evolve over time? I decided I didn’t want to be a slave to my phone. I had become conditioned to the “ding” of new email. Each one was urgent but few were important. I realized that I’d be happier if I carved out more time to do deep work without interruption. My time is precious, and I’m lucky that I get to choose what interrupts it. What have you been reading lately? I started listening to Obama’s latest book over Thanksgiving. It’s interesting to hear how he handled giant decisions as President. Other recent reads include: * Shackleton's Way — an interesting collection of leadership lessons from an expedition * Good Profit by Charles Koch — proof that I don’t have to agree with someone to appreciate how they grew their business * Boomtown by Sam Anderson — the story of Oklahoma City intertwined with the Oklahoma City Thunder (but fuck Clay Bennett for stealing the Sonics!) What’s a great piece of advice you've received? What matters is what the other person hears, not what you say.
How to
Review Performance Reviews
Daniel Jakaitis / 4 months

Review Performance Reviews

Everyone’s favorite time of year: performance review season! Roles in a startup change quickly, so the performance review process must adapt as team structure, company focus, and overall process also change. The differences between the two startups I've been at are stark. Here's a look at the process for each. Next Caller The process lasts a month and involves a set of 360-degree reviews.  We start in mid-November and go as follows: * Week 1: Self Review * Week 2: Peer Review (3-5 per employee) + Manager Review * Week 3: Direct Report Reviews (if any) * Week 4: 1:1 meetings with your manager to discuss performance and set next year’s goals Our reviews focus on major contributions from the past year and on how well the employee exemplifies the company values, plus an overall rating of general performance ranging from "below expectations" to "exemplary." I set my team’s performance goals after discussing the upcoming year with the other team leaders. Departmental goals (usually between 4-5 clearly defined objectives) are then used as goalposts for outlining individual team member goals. I use the Week 4 1:1 to lay out individual team member goals, and together we define a measurement and feedback system to monitor throughout the upcoming year. Lastly, our Head of Operations keeps an archive of all reviews in a secure directory. What works well: The broad peer review process requires individuals to focus on the whole team and not simply within their direct reporting line. Additionally, by focusing on our companies values as guideposts, we don't pigeonhole performance to the bars set in our job descriptions. Instead, we can incorporate instances when the employee went outside the scope of their prescribed duties, as there are intangible values different team members bring to the table outside of their roles. Challenges: Our process is time-consuming, though not nearly as bad as the 210 hour average [https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/performance-reviews-are-dead.aspx] other managers supposedly spend on their process. Selecting peer reviewers for my direct reports was challenging, as I didn't want to overburden some individuals who work across group while also ensuring that everyone got a voice somewhere. However, peer reviews are great at surfacing working relationships that are otherwise less visible. Finally, there are the technical quirks and challenges that come with the SaaS platform we chose (sorry, PerformYard). I would stick to simpler technology in the future. -------------------------------------------------------------------------------- Kard When I ran a review process at Kard, the team was 5 employees, so the process was much simpler. Because of our size and lack of organizational structure, a more direct review process worked well. Kard’s formal review process took place just after the turn of the year.  I wrote reviews of my direct reports, and in turn, was also reviewed by our CEO (my direct manager). After sharing the review with the individuals on my team and submitting to the CEO, I set aside hour-long meetings with each report to discuss the highs and lows of previous year and the areas for improvement. All in, the process took up only a few hours. What works well: Because the company was smaller, peer relationships were in the open, and the straightforward annual review process saved the team time. Team member roles were moving targets, so the reviews were much more focused on the value added to the company as a whole and less about individual goals. Challenges: Given Kard’s early stage and low structure, the review process was challenging because there were so much unknown about where we were headed. -------------------------------------------------------------------------------- Regardless of your team’s current process, it is worthwhile to revisit the process and think through your goals for the coming year. Review processes come in all shapes, and what works for one company may not work for another. Here are a few takeaways from the review processes I've participated in, ranging from Fortune 50 companies to 5-person startups: 1. Eliminate practices, such as rankings, that pit employees against each other and create a non-collaborative work environment. 2. Remove numerical scoring as it creates a depersonalized evaluation of employees. It is just as easy to use word based scoring that provides a less depersonalized assessment of skill. 3. Focus on the major wins and contributions throughout the year. Instead of highlighting losses, pinpoint future areas of improvement. 4. Detach compensation discussions from the review process. This allows reviews to focus on what is really important -- job performance. 5. Make the yardstick clear and available before reviews begin. This can take several flavors: in Next Caller’s case, we have a copy of our company maxims hanging right on our office walls and clear team objectives set every year. For Kard, the objectives were less defined, but each individual shared the same common goal of company success. 6. Review your review process as your company grows. Change is inevitable. Don’t settle for “what we have always done” as the fallback process each year. This process looks different from startup to startup, but the end goal should be the same: celebrate wins, patch up leaks, and make your team better in the coming year.
How to
Finish the Year Strong
Daniel Jakaitis / 4 months

Finish the Year Strong

The End-of-Year Checklist I like starting the year with an empty to-do list and a fresh perspective. As an obsessive list maker, this process naturally starts with another list. Some of the questions can be treated as action items, but many require deeper reflection (perfect for the quiet week at the end of the year). I hope that you find it useful as you close out 2020! As a Company * What actions most moved the company forward and how can we double down on them? What should we have spent less time doing? * Using the Pareto Principle [https://www.forbes.com/sites/kevinkruse/2016/03/07/80-20-rule/?sh=15a5959d3814] , the return on certain actions will significantly outweigh others. * Did our actions reflect our values? Did we call out times that employees personified our values? Do we need to add or subtract values? * Which relationships are most important to our success (e.g. customers, investors, partners) and what can we be doing to provide them with more value? As a Manager * Do we have the right people on the bus [https://www.jimcollins.com/concepts/first-who-then-what.html]? * Are the right people owning the right things or are there better ways that we can be distributing the work? I keep a Trello board to manage this; steal my template here [https://trello.com/b/v6lu8Xpc]. * How were my 1:1s? Did my reports walk away feeling that I had removed blockers, clarified vagueness, and given clear instructions? * Do my reports know their metrics for success? * How connected is the team overall? Meetings * Is every meeting on my calendar still relevant and useful? * Have I invited the right people to each one? * Are the major meetings for the upcoming year already scheduled? Mine are: * Off-sites * Customers business reviews * Employee reviews * Team town halls * Quarterly kickoffs * Annual trainings * Do I like the cadence and timing of my recurring meetings? * Can I schedule any back-to-back to minimize distractions? * Are meetings optimized to my energy peaks? * I’m fresh and driven in the mornings, so I schedule mentally challenging meetings during this window. * My mind is more relaxed and able to freely relate in the afternoon; I shift most brainstorming meetings to this time. Tools * Are we using the right tools (software, banking, equipment, etc.) to accomplish our goals? Can we eliminate any? I manage our tools in a Google Sheet; copy it here [https://docs.google.com/spreadsheets/d/1cvS-DarVIlliNjEsA90UVLZTOmtBH-4Vm-5N3HihmTM/edit?usp=sharing] . * Do the right people have access to each tool? Has admin access been given to the logical person? * Do we have the right tier of service for our size? * Are there more effective tools available that could reduce or combine the efforts of others? Finance * Are our finances generally in order? This can include: * Outstanding invoices * Unpaid bills * Sales commissions * Expense reconciliation * Credit card charges * Are there areas where we could cut costs next year? * Is billing set to preferred person and method? (I like to see every charge come through and to optimize points based on spend.) Operations * Where can we automate tasks? * Are the company files clean and organized? What about mine? * If a company file no longer seems relevant, I dump it into an archive folder rather than delete anything. * I run an inbox-zero on my file downloads and desktop, forcing myself to put any important files somewhere safe in case something happens to my computer. * Are our templated documents up to date? * Check company address, point of contact, and legalese on contracts, mNDAs, etc. * How are our processes? Which ones are sloppy, overly prescriptive, or begging to be eliminated entirely? Performance * How did I perform against my job description? * I keep my job description as a living document to capture what I take on and hand off over time. When I think my time could be better spent, I discuss this document with my boss and adjust accordingly. * How were my 1:1s with my boss? Did I come to the meeting with thoughtful questions and specific to-dos? * Did I listen to and incorporate feedback effectively? * Did I step up when I needed to? Did I delegate my areas of weakness? Role * How do I want my job description to change in the next year based on what the company needs and on my own strengths and weaknesses? * Which relationships within the company are most important to my efficacy? Can I do anything to improve upon those relationships? * Which tasks I should be taking on or offloading? Time * Am I spending time on the most valuable things [https://www.nfx.com/post/time-management-for-founders/] and letting the unimportant things fall through the cracks? * What have I been putting off? * Can I eliminate it or delegate it? * Can I give it more clarity? * I tend to dread tasks that either feel pointless or excessively vague, so I ask: * What can I stop doing altogether? Personal * Do I like my personal systems for keeping track of to-dos? * Do I know what I bring to the table when I join a meeting? * Am I maintaining a network of people I can turn to for advice? * Am I making time outside of work for activities that keep me healthy and happy?
Deep Dive
Money In the Bank
Daniel Jakaitis / 4 months

Money In the Bank

Despite the uncertainty of the past year, new business applications are up [https://knowledge.wharton.upenn.edu/article/mollick-pandemic-startups/] 38.5% year/year [https://www.census.gov/econ/bfs/index.html]. For new entrepreneurs it can be hard to know what steps to take when it comes handling your new businesses finances. With the explosion of neobanks in the last few years, there are more options than ever to pick from for your business banking needs. Here’s our scoop when it comes to opening accounts and optimizing your existing banking stack. When is the right time to open your first business bank account? According to the US Small Business Administration [https://www.sba.gov/business-guide/launch-your-business/open-business-bank-account] , “as soon as you start accepting or spending money as your business.” However, that can be a tricky in practice, so let’s look at a few scenarios: Long story short: If you plan to make more than a few bucks, and hope to grow your business, separate the business finances from your personal account. What banking and corporate card features are right for you? So you are taking the leap. You are gonna need a business checking account and a business card (charge or credit). Lucky for you, nearly all banks offering business checking will have cards available to get you started. However, to get the most bang for your buck you may want to mix it up. Decisions around checking accounts are straight forward. You will want some combination of the following: * Lowest minimum account balance * Lowest cost (or free) wire transfers * Low or no monthly fee * Simple digital experience When it comes to corporate cards (charge or credit) it is a little more nuanced and highly dependent on use cases. Here are a few questions to think through: * Will you need to issue invoices for your business? * Azlo offers invoicing as part of its suite. [https://www.azlo.com/online-invoicing/]For more traditional bank card offerings you will need a separate piece of invoicing software. * Will you need a line of credit? * It is generally easier to maintain credit accounts or other types of debt with the same bank that handles your primary business checking accounts. Often, by using the same bank, you will get reduced interest rates on loans or lines of credit. * Which products or vendors will your company be using? * Many startup focused issuers, such as Brex, offer deep discounts for tons of the tooling you are likely already using (who doesn’t want up to $100,000 in AWS Activate credits? [https://www.brex.com/rewards/]). * How much will you be spending? * Premium cards like the AMEX Platinum reward big spending with up to 85,000 points after 15k of spending. [https://creditcard.americanexpress.com/d/business-platinum-drawer/?utm_mcid=3541058&utm_source=google&utm_medium=cpc&utm_term=%2Bamex+%2Bbusiness+%2Bplatinum&utm_cmpid=620018049&utm_adgid=30989218992&utm_tgtid=kwd-41365011624&utm_mt=b&utm_adid=469737613399&utm_dvc=c&utm_ntwk=g&utm_adpos=&utm_plcmnt=&utm_locphysid=9004564&utm_locintid=&utm_feeditemid=&utm_devicemdl=&utm_plcmnttgt=&utm_programname=brandproductspecific&gclid=Cj0KCQiA7qP9BRCLARIsABDaZzgWO3ZCWgs7VS1-oh6Vgpr1ljWoVEH0JuPWpIVyk7n_DXiexEy0iQYaAsxOEALw_wcB] Big spending can come with big rewards, so shop around. * Do you have plans for employee expense management? * Certain issuers, like Ramp [https://ramp.com/capabilities], have issuing built right into their platform. Incumbent issuers like Chase or AMEX will require you to explicitly request new cards for each employee expense account. OK, so what are your options? It never hurts to explore options. No choice is permanent. Banking needs can change as headcount grows and vendor relationships change. Having multiple accounts for specific needs can be a viable solution. Below is a list of our favorite options to kickstart your search. Silicon Valley Bank [https://www.svb.com/startup-banking] Arguably the most popular banking option for startups, SVB has cornered the market for a reason. They offer a 1.00% APY for balances under $1MM for pre-Series A companies, plus a line of business credit cards [https://www.svb.com/business-banking/business-credit-card]. Though their checking account is only free for the first 3 years, they boast a slew of events and other resources for founders. Novo [https://banknovo.com/] This Techstars-backed startup claims no hidden fees [https://banknovo.com/assets/documents/novo-fee-schedule-july-18.pdf] plus a superb online and mobile experience. Focused on excellent customer service, you can chat with their team right through the app. Novo also offers a business debit card and decent perks package [https://banknovo.com/perks]. Mercury [https://mercury.com/] This no-frills solution offers analytics, integrations, and API access as their differentiating points, plus a product line specifically tailored to ecommerce [https://mercury.com/ecommerce]. The rewards side [https://mercury.com/pricing] is fairly scant until you hit $250k, but even the promised partner rewards for the Tea Room are not described in detail. BlueVine [https://www.bluevine.com/] With no fees, no minimums, and a lofty 1.00% APY on amounts under $100k, BlueVine is an incredibly solid option. Their main differentiators include invoice factoring [https://www.bluevine.com/invoice-factoring/] and super fast lines of credit [https://www.bluevine.com/line-of-credit/], making this a good choice for companies heavily reliant upon large invoice payment. They offer a debit card to boot. Azlo [https://www.azlo.com/] Beyond the standard set of banking options, Azlo lets customers issue and track invoices plus set up payment options.  Though they offers a free tier, the real magic seems to lie within the Azlo Pro [https://www.azlo.com/azlo-pro/] feature set, which enables further automation and advanced invoicing capabilities. Each checking account automatically includes a debit card as well. Brex [https://www.brex.com/] Previously branded as the credit card for startups, Brex has recently worked to encompass businesses of all stages. Their new Cash product [https://www.brex.com/product/cash-management-account/] means that banking and expenses can be handled in one place. Flush with tech credits, sign-up bonuses, and point multipliers, Brex knows that its clients love to get the most out of their spending. And don’t forget their member-only lounge in SF [https://www.businessinsider.com/brex-san-francisco-members-only-lounge-2019-3]. Ramp [https://ramp.com/] This charge card angling to take on Brex [https://techcrunch.com/2020/02/12/ramp-is-a-corporate-card-focused-on-helping-you-spend-less/] offers an impressive 1.5% back on everything [https://ramp.com/savings], plus a whole lot of startup-focused savings. Pricing is free for companies with fewer than 50 employees, with fixed rate and custom tiers beyond that. They even have a new vendor management system [https://www.producthunt.com/posts/ramp-vendor-management] that brings visibility to recurring vendor payments and consolidating their overhead. Hatch [https://www.hatchcard.com/] Designed for “underestimated small business owners,” the Hatch card is a great fit for founders just starting to hustle. With no fees, a set of perks [https://www.hatchcard.com/perks] tailored more toward brick and mortar owners, and an available line of credit [https://help.hatchcard.com/hc/en-us/articles/360052221053-Credit-and-the-Hatch-Card] , Hatch seems to be targeting the companies that more tech-focused banks may be leaving out. Look out for their mobile app and robust merchant rewards program to launch in the coming months.
Finance
R&D Tax Credits to the Rescue
Daniel Jakaitis / 4 months

R&D Tax Credits to the Rescue

Are You Leaving Money on the Table? This week, we spoke with Brian Goodwin [https://www.linkedin.com/in/bgincentax/] about R&D tax credits and what they mean for startups. Goodwin is the Director of Sales and Partnerships at Incentax [https://incentaxllc.com/], a tax credit consulting firm focused on these tax credits for businesses. Quibi has pulled the plugged [https://www.wsj.com/articles/quibi-weighs-shutting-down-as-problems-mount-11603301946] What is the R&D tax credit and how does it apply to my company? The Research and Experimentation (R&D) Tax Credit has been around for over 30 years and aims to promote innovation and jobs within the United States. Traditionally, this credit has been used by larger profitable companies looking to eliminate their overall tax burden, since it is applied dollar for dollar against income tax liabilities. A great example of this is Amazon, who reduced their federal tax bill to nearly zero [https://itep.org/between-the-lines-amazon-q2-reports-hints-it-will-avoid-taxes-on-this-years-record-profit-haul/] . Startups innovate at a very high level, but until the recent PATH Act [https://www.investopedia.com/terms/p/path-act.asp], they were unable to take advantage of the program. Now early-stage businesses with qualifying expenses can put the credits toward the employer share of Social Security payroll taxes, thereby freeing up cash flow. What makes a startup eligible for the early-stage R&D tax credit? Companies just need qualifying R&D activities and expenses. These can differ by industry, but here are a few quick items we look for at a high level: * Does the company create or improve a new product process or technology? * Do employees have scientific-based roles (e.g. engineer, mathematician, developer, etc.)? * Was there a level of uncertainty in the process? Startups are eligible for up to $250k per year in credits on R&D-related payroll taxes (~6.2% of wages) if they: * Have a total of less than 5 years total of revenue (or gross receipts) * Have less than $5 million in revenue in the current open year (greater revenue in prior years is allowed) One thing to note: income tax credits (if available) must be applied before payroll tax credits. For instance, if a company gets $100k in R&D credits while having an income tax liability of $25k, the credit would be applied to eliminate that first. The remaining $75k would be applied to payroll taxes in the early-stage provision. Why don’t more companies know about this? Is this different from other typical business deductions? Companies often focus on deductions rather than credits in order to reduce the amount paid on taxes. With a deduction, you are reducing taxable income, which decreases the amount owed in taxes, whereas a credit is a dollar-for-dollar cancellation of tax liability. Credits tend to provide more bang for the buck. Example: A person with an income of $200,000 is taxed at 32% and pays $64,000 in taxes. * DEDUCTION: A deduction of $60,000 leaves $140,000 of income. Potentially taxed at a lower rate of 24%, the tax bill would be $33,600. * TAX CREDIT: If instead the person received a tax credit of $60,000, they still have a tax bill of $64,000 on the $200,000 of income. With the dollar for dollar tax credit, the final tax bill would be $4,000. The R&D tax credit is mainly underutilized because businesses, particularly early-stage ones,  think they won’t qualify for it. Unfortunately, very few conversations are being had to change that, because tax firms tend to focus on larger business. That leaves a big knowledge gap in which early-stage companies and their advisors aren’t given enough resources to understand the potential of this credit. They are missing out on cash flow that can be reinvested in the business, all generated from expenses they’ve already incurred. What are some examples of companies using the credits? On the early-stage side, we’re working with a biotech company with 25 employees (including 5 engineers involved in R&D) and roughly $125K in annual revenue. They qualified for $105K in Social Security tax credits. Another small startup developing a mental health app just did the same, freeing up additional capital to reinvest into clinical trials key to their development. On the income tax credit side, we currently are working with a 45-employee company that manufacturers packaging equipment. They’ve been in business for over 20 years but have never taken the credit. With a multi-year study, they’re eligible to apply over $600K in credits towards current and future tax liabilities. Can these credits ever be applied retroactively? The payroll tax application of the R&D credit is only good for the open year/current year.  However, the income tax application of the credit can be claimed retroactively, up to three years back for the federal credit. Most states also have a state R&D tax credit, with the rules and lookback periods varying by state. (California, for example, has a lookback of four years.) Outside of that window, income tax credits can be carried forward up to 20 years and applied to income taxes at a future date, as seen in the manufacturing company example earlier. Are there any risks in using R&D tax credits? The main risk is working with someone who either doesn’t have your best interest in mind (they may over-inflate the credit) or doesn’t specialize in the R&D tax credit (they may not get the calculations correct). If I think my company may qualify, what do I do next? Speak with either a CPA or a tax credit consulting firm, like Incentax, and learn more about your individual situation. Any recommendations for finding a qualified CPA with R&D tax credit experience? Smaller CPA firms are not likely to offer R&D tax credit services because it is very specialized. Ask your firm if they offer it all, and then whether it’s in-house or through a third party. Incentax works with CPA firms in these exact cases, providing expertise and advice on an as-needed basis. -------------------------------------------------------------------------------- What startup do you find most interesting at the moment? StartEngine [https://www.startengine.com/?utm_source=boringstartupstuff] - their platform helps startups with crowdfunding, and they are creating a secondary market for startup investors to trade their shares. What have you been reading lately? Talking to Strangers [https://www.amazon.com/Talking-Strangers-Should-about-People-ebook/dp/B07NDKVWZW] by Malcolm Gladwell; another thought-provoking book on the way we perceive and interact with others. What’s a great piece of advice you've received? One from Ryan Holiday’s The Obstacle Is the Way [https://www.amazon.com/Obstacle-Way-Timeless-Turning-Triumph/dp/1591846358] stands out. A challenge that looks insurmountable is, in fact, the way through. Obstacles are only obstacles because we perceive them to be. See it in a different way and you can, and will, overcome it. To connect with Brian about tax credits and more, email him here [bg@incentaxllc.com].
Deep Dive
Murphy's First Law
Daniel Jakaitis / 4 months

Murphy's First Law

> “Needing insurance is like needing a parachute. If it isn’t there the first time, chances are you won’t be needing it again.” Insurance is a big ugly topic. It is one of those costs that feels like a waste until the day you need it. When founding or starting a company, most people only spend time thinking about shipping and selling product — they don't think about the day they are hit with a multi-million dollar lawsuit from a former employee. "Hiscox reports that one in five small or medium-sized businesses will face employment charges with an average cost to defend of $125,000 [https://www.inc.com/marissa-levin/5-things-employers-can-do-now-to-avoid-costly-and-harmful-employee-lawsuits.html?cid=search] ". The last position you want to end up in is paying $1250 per hour legal fees [https://www.quicksprout.com/what-i-learned-from-fighting-a-12-month-lawsuit/] because you didn't read the fine print.. "[M]ake sure your policy is flexible enough to allow you to pick your own attorney. The insurance company’s goal is to spend the least amount of money, which means the lawyers they appoint might not be your first pick." You need insurance, but be wary of how you select coverage. Before we talk about where to grab insurance for your business, let's do a breakdown of the 8 types of insurance your startup likely needs: -------------------------------------------------------------------------------- Professional Liability or Comprehensive General Liability * What it does: This is the most basic form of business insurance and protects you against liability for product usage that causes physical damages (property, bodily). * When you need it: Day 1. Once your company becomes a legal entity, you will want to get some form of General Liability or Professional Liability * What amount of coverage to purchase: $2M total coverage is a standard starting point for a small business. * What it costs: starts at $500 per year Errors & Omissions (E&O) Insurance * What it does: Protects against claims against you that are caused by system issues or work provided to customers that result in financial harm to your customer. Almost all major SaaS enterprise contracts will require some type of E&O coverage * When you need it: The moment your platform or product is live and handling customer transactions or data. It is fine to wait until launch dat to secure E&O as this type of insurance policy can be set up to cover based on when the claim was made and not when the actual event happened. * What amount of coverage to purchase: This is heavily based on the revenue of your company, size of customer contracts and sensitivity of processes or systems your product or service deals with. You should work with your agent to determine the right level of coverage. * What it costs: Starts around $2000 per year Workers Compensation Insurance * What it does: This will cover costs of employee injury on the job. * When you need it: For founders, the moment you decide to make your first hire you should get setup with Workers Comp Insurance. At a certain size, it is required by law to carry workers comp insurance (typically 3 or more employees, but in California you will need it for your first employee). * What amount of coverage to purchase: Start at $750k to $1M. * What it costs: $400-600 per employee per year Property Insurance * What it does: Once your business has a physical presence or storefront anywhere you will want to investigate whether you need property insurance. * When you need it: Typically any company that has warehouses, owns office space or in some cases, lease offices. Property insurance is occasionally required as part of the terms to lease or sublease a space. It is strongly encouraged if you own any physical properties (warehouses, land, offices) that you acquire Property insurance. * What amount of coverage to purchase: Coverage amount will vary based on lease terms or size and usage of space. * What it costs: Highly variable on the space you own or lease - speak with an agent. Employment Practices Liability Insurance (EPLI) * What it does: Covers costs for defending against lawsuits or paying out settlements and judgements in employment related cases. * When you need it: In conjunction to workers comp, EPLI can cover employment claims made against the business of several kinds (e.g. harassment, discrimination). Typically, businesses will get EPLI as they move into the >10 employee range. * What amount of coverage to purchase: Around $1M * What it costs: $4500-10,000 per year Cyber (Data Breach) insurance * What it does: This insurance will cover any costs that are incurred as a result of defending or investigating a data breach. If you get hacked, this will prevent your company from completely losing their shirts as a result of legal fees, customer clawbacks, operational expenses from investigations etc. * When you need it: The second you start storing customer, client or employee data. * What amount of coverage to purchase: Similar to E&O, this will be highly variable on the types of data you store on behalf of customers and the operating model of your business. Speak with an agent to get a better idea of how much coverage you need. * What it costs: Starts around $2000 per year Directors & Officers (D&O) Insurance * What it does: Covers legal claims against company leadership such as: breach of contract or fiduciary duty, mismanagement, noncompliance with laws and regulations, misuse of company funds, misrepresentations of company assets, and failure to comply with workplace laws. * When you need it: If you are seeking your Series A or above you will likely be required to show proof of D&O insurance. Additionally, as your company scales and has more public facing communications you will likely want this to cover any issues that arise. * What amount of coverage to purchase: Around $1M with increases as your business scales * What it costs: Starts at $5k per year Key Man Insurance * What it does: This provides life insurance for individuals that are critical to the function of the business. This typically can be executives or founders whose passing would result in a substantial impact on the business. * When you need it: Once your business is producing revenue and has a headcount north of 10 employees you should consider getting Key Man policies. Additionally, many Series A or later funding rounds will have a clause that requires proof of Key Man insurance policies. * What amount of coverage to purchase: At a minimum $1M per Key person. This should be evaluated as the business scales. * What it costs: Starts at $1000 per year per individual. This will vary widely due to health and other considerations of the individuals you insure. -------------------------------------------------------------------------------- Where do I get Insurance? Ok - so now we know what you need. Where do you go for insurance? First off, you can find a specialized agent or broker for all of the types listed above. Some common places to start are with online brokers that can aggregate quotes for you. Here are some more tech friendly startups and brokers that are tackling the process of buying and managing your companies insurance policies: * https://www.vouch.us [https://www.vouch.us/?utm_source=boringstartupstuff.com] * https://withlayr.com/ * https://foundershield.com/ * https://www.embroker.com/ There are also plenty of big players in the space as well such as: * https://www.biberk.com/ (Berkshire Hathaway) * https://www.thehartford.com/business-insurance-landing-page (The Hartford) * https://www.hiscox.com/small-business-insurance (Hiscox) * https://www.chubb.com/us-en/business-insurance/ (Chubb) Side note: The difference between an Agent and a Broker Agents act on behalf of insurance companies — sometimes one or more— to sell insurance to businesses. Brokers, on the other hand, represents you the business and goes to seek quotes in the marketplace. When buying insurance you can contact several agents or brokers. It is recommended working with a reputable broker and also getting independent agent quotes to compare prices. -------------------------------------------------------------------------------- Conclusion * If you operate a tech startup, at the very least, you need GLI and E&O policies and may be legally required to have Workers Compensation Insurance if you have any employees. * As your business grows, reevaluate your coverage costs & needs. It is best practice at a minimum to do this annually, if not quarterly. * Read the fine print. Don't just get as much coverage as possible. You want to make sure coverage terms are what you expect. Lastly, below is a chart from Foundershield [http://foundershield.com/?utm_source=boringstartupstuff] to give you an idea of when in your companies life you should be thinking about these types of insurance:
Deep Dive
Location, Location, Location
Daniel Jakaitis / 4 months

Location, Location, Location

We are excited to have Gabe Marans of Savills join us for a Q&A this week to cover what your team should think about when looking for a change in office space. Gabe joined Savills in 2008 and has since negotiated lease transactions for a total of over 4 million square feet. With over a decade and half of experience, Gabe has become an expert in space identification and deal structuring for his clients. He works with clients of all sizes, but is particularly close to the startup community in NYC, having led the Savills brokerage team in completing MongoDB’s headquarters relocation and subsequent expansions in the former New York Times building. [Savills US [https://www.savills.us/people/gabe-marans.aspx]]. You can find great insights from Gabe on LinkedIn [https://www.linkedin.com/in/gabemarans/] and at his personal website, https://gabemarans.com/ -------------------------------------------------------------------------------- Thanks for joining us Gabe! How does a first-time founder or startup operator start to look for office space? How do you even know when a company is ready to move into their own space? Real estate decisions are most frequently driven by a combination of headcount, growth projections and culture. That said, most startups follow a similar path that starts with a shared office (ie in VC or Angel office). They then ‘graduate’ to coworking before migrating to HQ flex space which offers more control of the culture and typically has a longer term commitment. This of HQ flex space as premium white labeled space. The final move is committing to a traditional lease, either via sublease or direct structure, depending on a company’s growth rate and availability in the market. This final step typically happens around a Series B for an HQ, although we sometimes don’t see it until after Series C. How long from start to finish does it take startups to lease a new office? It depends on the growth stage of that company. On one end of the spectrum is coworking, which can be implemented in 30-60 days. On the other end is direct space which can take 8+ months to evaluate the market, negotiate term sheets and leases. If the space needs a full buildout, then you’ll need to factor in another 4+ months for construction and permitting. For example, a 100 person company looking for a brand new space, should budget ~12 months for the entire process. As we like to say, it never hurts to start early. But starting late means far fewer options and negotiating power. The commercial leasing process can be pretty invasive for a private company - can you talk me through the process from finding a space you like to finally move in? What information do operators need to have handy? Who on their team should be involved (e.g. Legal, Finance)? Every company is different, but we’ve seen a trend towards real estate decision makers in the CEO, CFO and Head of People departments. Although not surprisingly, an important factor is company size – the larger it is, the less likely the CEO will be involved in the day-to-day. Let’s use the same [INS: 100-person :INS] company example mentioned earlier within the sample 12-month process. Months 1-3 are focused on market evaluation, which includes space surveys and physical space tours. Months 4-6 would be dedicated to proposal, LOI and lease negotiation. Months 7-12 are focused on design, permitting, construction and move-in. Tell me a little about the financial considerations a company should plan for when thinking about finally getting an office. What are the hidden costs moving into a new lease space (IT, food, furniture etc.)? Leasing office space is a significant expense for all companies. Aside from the base rent, there are also electricity and cleaning costs. Annual operating expenses, real estate tax escalations as well as commercial rent tax (in NYC). Plus, furniture, IT/wiring/AV, and pantry stocking. Part of the real estate advisor/broker’s role is to help identify all these costs upfront to ensure there are no surprises. Real Estate is sometimes referred to as the "Silent Killer" of high growth startups. How do you advise startups to balance growth expectations with reality (e.g. not over or under leasing space as they scale)? I know it gets a lot of air time, but it’s rare when real estate is responsible for the ultimate knock-out punch for a high growth startup. The danger is overcommitting to a long-term liability that impedes a startup’s ability to grow revenue. As such, the best path for a pre-Series B company is to focus on either flexible short-term space or low cost subleases. And if they can find a low-cost flex space? That’s the golden ticket. The downside is this strategy requires more frequent moves, which can be interruptive to business operations. With the mounting pressure for startups to allow more remote work, what do you see changing in the landscape of office space? How can startup operators continue use their lease space effectively even as trends move towards more remote work? The role of the office has transformed into a hub for collaboration and culture building, especially for startups and growth companies. The partial remote work/WFH movement isn’t going away and will be a permanent part of the post-COVID-19 landscape. It’s possible that this translates into less SF required although the SF per employee ratio is growing and has moved away from the unrealistic ideal of 100 SF per employee. But assuming remote work allows for less SF needed, this would allow companies to invest more $$ into less space and hypercharge the amenities available to their employees. We’re hearing lots of cool ideas and it’s an exciting time to be in the workplace business. What do you think the biggest mistake first time founder and operators make when approaching the decision around office space? Any mistakes around real estate. Bad personnel hires can be unwound. Bad real estate decisions are much harder to exit. Get a trusted advisor, ask a million questions and get educated. The single biggest mistake is when founders think they can do it all. News flash…you might, but the odds are against you. I know this sounds self-serving so let me be clear. I don’t care who you hire, just make sure you have a dedicated exclusive advisor. What happens if the company hits rough patches, when should they approach the landlord about renegotiating lease terms? Are variable leases possible? Real estate decisions always take longer than expected. As soon as there’s concern, discuss it with your advisor who can help craft a playbook and strategy. Don’t wait ‘til the last minute! That’ll just work against your negotiation leverage. Is there anything we missed that you think startup operators should know about? Real estate can be fun. The office in the post-covid work will increasingly be about building culture, fostering collaboration and employers will achieve that via enhanced amenities. If done right, the office perfectly broadcasts the company’s culture and makes recruitment and retention easy. If done poorly, expect the opposite. -------------------------------------------------------------------------------- What startup do you find most interesting at the moment? This is like asking a parent about their favorite kid! But there are specific sectors that are fascinating right now including HealthTech, InsurTech and FinTech. Lots of highly innovative companies in those sectors and HQ in NYC and which will be in the news for years to come. Which startup has the best office in NYC? Another curveball…I’m going to play this one safe too and say Facebook at the soon-to-open Farley Building. It’s such an incredible building with an amazing rooftop, which alone almost makes one want to work there. Which is exactly the point! We always like to keep a good reading list handy, what have you been reading lately? I’ve been on a big history kick throughout the pandemic. Pretty much anything by Robert Caro – I just finished rereading his “Passage of Power”. Also loved Erik Larson’s “The Splendid and the Vile” about Churchill during the London Blitz. Lots to learn from the great men of history. I just started “The Man Who Ran Washington”, which is the recently released biography on James Baker. Amazing life and highly recommend.
Deep Dive
Emerging Benefit Trends to Help You Compete
Daniel Jakaitis / 4 months

Emerging Benefit Trends to Help You Compete

This week we are here to talk about benefits and compensation trends that can help your startup compete with the big boys for the best talent out there. If you like, share your referral link at the bottom of this email with your friends for some sweet swag! Emerging benefit trends to keep you competitive Hiring top talent is incredibly competitive. Most startups can't compete with FAANGs of the world in terms of cash comp. And because of this, most hiring managers and founders list hiring as the number 1 most challenging part of running a company. So how do you compete? Well here is a good look at some of the biggest trends and changes in the benefits and compensation space that get us pretty jazzed up: Increased Work Flexibility Companies are moving towards more flexible work offerings, unlimited PTO, and work-from-home solutions. This stems from the knowledge that the mental health of the employee directly effects their productivity, along with the current epidemic, working from home has been found to be a viable option for many companies. * According to Global Workspace Analytics [Source] [https://globalworkplaceanalytics.com/work-at-home-after-covid-19-our-forecast] they estimate that— "25-30% of the workforce will be working-from-home multiple days a week by the end of 2021." * Accord to an SHRM survey, 69% of those questioned would be more inclined to take a job if they offered unlimited PTO. [Source] [https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/unlimited-pto.aspx] * Even before the current epidemic, several repeated surveys by GPA, has shown that— "80% of employees want to work from home at least some of the time." [ Source [https://globalworkplaceanalytics.com/work-at-home-after-covid-19-our-forecast] ] * An estimate by Global Workspace Analytics also states that work-from-home policies will save "...U.S. employers over $30 Billion a day [Source] [https://globalworkplaceanalytics.com/work-at-home-after-covid-19-our-forecast] in what would have otherwise been lost productivity during office closures due to COVID-19." * Studies have shown that employers who offer an unlimited PTO policy actually have employees who take less time off, 13 days on average compared to 15, according to a Namely survey. [Source [https://blog.namely.com/unlimited-vacation-policy]] * Calm (https://www.calm.com) , a startup that has quickly climbed the ranks of the App Store pushes a "Take what you need" PTO policy. [Source] [https://www.calm.com/blog/life-at-calm] * Cockroach Labs (Cockroach Labs [https://www.cockroachlabs.com/]) , a database focused startup, offers it's employees what they call "Flex Friday" , which allows their employees to choose how to spend that day, whether it's working or spending time at home with family, or whatever else they choose. * Cockroach Labs also offers a very generous paid parental leave which not only includes 12 weeks of paid . parental leave, after a 30 days of given time off, but also another 12 weeks of guaranteed 80% time, transition, and re-entry support, with an additional $500 in "baby bucks" * Envoy [https://envoy.com/] provides all their employees with unlimited vacations in order for them to "relax and recharge." * Companies like Sendoso  are now offering a flexible work from home benefit [ Source] [https://jobs.lever.co/sendoso/8409a053-45b8-4f80-8989-1cd3782a1636] to all their employees. This is in addition to their "Take-What-You-Need" PTO policy. > Now that the world is remote, benefits will take new forms. Instead of ping pong and La Croix, companies will win you over with... - Mental health support - Plant subscriptions - Ergonomic equipment - $$ to spend on Upwork - Access to learning plats - Workout classes What else? — Steph Smith (@stephsmithio) August 31, 2020 [https://twitter.com/stephsmithio/status/1300511471965630464?ref_src=twsrc%5Etfw]
How to
The One Thing That Kills Startups
Daniel Jakaitis / 4 months

The One Thing That Kills Startups

The only thing that kills startups is hiring too fast. > Trying out a new experiment at @gumroad [https://twitter.com/gumroad?ref_src=twsrc%5Etfw]: bringing on a quarter-time head of product. Welcome @dvassallo [https://twitter.com/dvassallo?ref_src=twsrc%5Etfw]! — Sahil (@shl) September 1, 2020 [https://twitter.com/shl/status/1300848723182776322?ref_src=twsrc%5Etfw] I firmly believe the only thing that kills a startup is hiring too many employees too quickly. It is not product market fit, it is not whether you raised funding, it is not whether you missed out on a big customer or faced an uphill legal battle. Fundamentally, the only reason a startup entity will die is due to labor costs. You can always pivot product, you can recapitalize after a lawsuit, you can find different customers. But, if you are on the hook for 7-figures in employee salaries and benefits you are out of options. This is not at all to say to not hire. In fact, I strongly urge you do so or else your business will go nowhere. When it comes to hiring, be patient and be thoughtful. Before you hire, you must be able to precisely describe the job to be done and identify how this role increases top line revenue OR reduces operating costs. A lot of companies hire because their VCs tell them they need to grow. But growth by hiring is not only a vanity metric, but a quick road to startup death. You are thinking this is a roundabout way of saying "watch your burn rate". And you are right, it is. When should I hire? Employees are the most expensive part of a business. When they work out they should be force multipliers by at least 1.5-10x their costs. Calculating ROI on a new hire is very challenging. To start, you need to model out the initial cost impact on runway. A fast and cheap way to model burn rate is using something like: https://startuprunway.io/. While a full years salary may cost $100,000+, in practice you do not pay employees $100k upfront. You should model out the monthly costs of adding him/her to the business. (Depending on the cadence of your cash flow, it may make sense to instead model out the 30/60/90 day costs). In doing so, you can determine how many months of runway are impacted by the hiring decision. Make sure your runway model properly represents revenue expansion over the coming months (e.g. new customers coming starting in coming months). You should estimate best and worst case scenarios of hiring outcomes: 1. New employee helps expand business (through sales, new product release, operating efficiency etc.) 2. New employee adds a net negative or zero value. At their 3 or 6 month anniversary, you need to decide whether or not to keep your new employee. Set a calendar event for the exact date this decision is to be made. Decide ahead of time what criteria is being used to make this decision. Letting an employee go is the hardest part of operating a company. Be prepared to handle this the day you make your first hire. A common way of valuing the employee in your forecasts is using an Employee Lifetime Value (ELTV) model. This model keeps in mind the ramp up period from initial start to full contribution of the new employee, while being realistic about the sunset on added value that comes when an employee leaves the job. It's not just about the money Effective talent onboarding requires extreme clarity of goals on day 1. Just because your team is financially able to take on the cost of a new employee, does not mean your operating and management processes are ready. Each new employee adds a square number of total lines of communication within the company. Clear lines of communication must be upheld, goals should be explicit, and work tasks should be well defined. Think before you leap Hiring too fast, without proper onboarding and management systems in place to support the new hire, will destroy your company. But keep in mind, a healthy, well managed hiring practice can 3X your revenue growth and 2X your profit margins. Having personally experienced an unnecessary expansion followed by swift downsizing, I cannot stress enough to startup operators how careful to be when deciding they need to hire. Poorly executed hiring strategies have a real human impact on the people you work with and a lasting cultural impact on the company.
How to
Can You Afford To Do Enterprise Sales?
Daniel Jakaitis / 4 months

Can You Afford To Do Enterprise Sales?

Can you afford to do enterprise sales? If you focus on enterprise sales, you will at some point need to show proof that your company has some operational integrity. SOC2 is the most common auditing procedure expected among early stage software startups. The SOC2 audit comes in two flavors: * Type 1: An initial 'in place' audit that verifies security and operations practice at a specific "point in time." This is done once and will run between $10,000 and $50,000. * Type 2: An annual audit that reviews a paper trail over the preceding 12 months to ensure your company meets the audit standards. Can cost $15,000 - $50,000 annually. I encourage using an advisory firm to walk you through your first set of audits. Depending on the type of work they do this can tack on an extra $10 to 50k per audit. > All in, a SOC2 Type 1 and 2 audit will cost a small company $25,000 to $100,000. Each year of Type 2 audits will add $20,000+ in expenses. Keep in mind none of these costs account for the internal labor cost of managing these audits. -------------------------------------------------------------------------------- How to avoid getting on the hook for $179,000,000(We are not lawyers and below is not legal advice) Indemnification clauses will pop up in every contract you negotiate. Any lawyer worth their salt will zero in on these clauses like a fly to poop. What do these clauses do?Indemnity is a risk transfer from the one party to another (from buyer to seller in a purchase or service contract). Why should you care?If you get sued, and your corporate docs are not in order, there are scenarios where you can personally be on the hook.  Or, in the event you decide to sell your business, customer contracts containing uncapped or excessive indemnity clauses can create acquisition hurdles. Just ask Uber about how much their indemnification of Anthony Levandowski might cost (hint: $179,000,000) [https://arstechnica.com/cars/2020/04/levandowski-says-uber-must-pay-his-179-million-judgment-to-google/] . What to watch out forIf you are the purchaser/licensee/employer you usually want some form of indemnification in the event of loss or liability that results from the use of the provided good. If you are on the other side of the table (seller/licensor/employee) you are looking for indemnification from breach of the contract terms. As an example, if the purchaser modifies software in a way to infringe on IP of another company (breaching your agreement), you the seller do not want to be on the hook for the infringement liability. A few things to keep an eye out for: * Watch out for requests for uncapped indemnity or vague language. * Any clauses holding officers or employees directly responsible * It is usually better to have explicit language on the type of losses that would be covered. It is common to cover attorney fees. * Know what circumstances would be covered. * Keep an eye out for broadly scoped clauses. Phrasing such as "any services performed under this agreement" could be a red flag. There are dozens of things to keep an eye on depending on the type of contract. I encourage consulting an attorney on a case by case basis. Some final thoughts Verify that your business's corporate docs are in order so the corporate veil cannot be pierced, get good E&O coverage, and continue on with life.

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