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.&nbsp;

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&rsquo;t let them down. Here is a punch list of things to make your new hire onboarding memorable and successful.
<h2>Pre-onboarding</h2>

Onboarding starts the moment your new hire accepts their offer letter. To set yourself up for success on Day One, follow these steps:
<ul>
<li style="font-weight: 400;" aria-level="1">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).&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">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.&nbsp;</li>
<ul>
<li style="font-weight: 400;" aria-level="2">Bonus Tip: Send a second email 24 hours before their start date to remind them of any last details regarding their first day.</li>
</ul>
<li style="font-weight: 400;" aria-level="1">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.&nbsp;</li>
</ul>
<h2>Day One</h2>

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:

<ul>
<li style="font-weight: 400;" aria-level="1">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.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">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&rsquo;t disrupt learning sessions later in the day.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Enjoying a eam lunch - Who doesn&rsquo;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.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Scheduling a hiring manager 1-1 - &nbsp;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.</li>
<li style="font-weight: 400;" aria-level="1">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.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Telling them when it&rsquo;s OK to leave -&nbsp; 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.</li>
</ul>

<h2>The First Couple of Weeks</h2>

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.&nbsp;

<ul>
<li style="font-weight: 400;" aria-level="1">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.</li>
<li style="font-weight: 400;" aria-level="1">Expanded SME and cross-team training -&nbsp; 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.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">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&rsquo;t make this too formal or overthink it, but make sure the invite is explicit enough so that new hires feel welcome.</li>
</ul>
<h2>The First Couple of Months</h2>

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:

<ul>
<li style="font-weight: 400;" aria-level="1">Set up annual goals and OKRs -&nbsp; 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&rsquo;t have a review process, <a href="https://boringstartupstuff.com/newsletter/dec-1-2020-review-performance-reviews">maybe it's a good time to start thinking about one</a>!).</li>
<li style="font-weight: 400;" aria-level="1">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.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Automate future touch points - Tools like <a href="https://www.teamgather.co/">Gather</a> can automate touchpoints with new (and existing) team members around fun topics like&nbsp; upcoming birthdays or serious ones like monthly reminders to complete KPI reports. Gather has several playbooks to <a href="https://www.teamgather.co/people-operations-playbook?moments=onboarding">run your entire onboarding process!</a>&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Setup Some Continuous Touch points - On your calendar, schedule relevant meetings for the future. This should include consistent 1-1&rsquo;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&rsquo;s range of responsibilities.&nbsp;</li>
</ul>
 
Even minor attempts at structuring an onboarding process will pay dividends.&nbsp; Failing a new hire by not providing a smooth onboarding process will increase your attrition rate and be a drag on the broader team.&nbsp;

An employee's first few days at your company are formative. Providing a structured onboarding program and making new hires feel welcome

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 ...

What do you think of when you hear the word &ldquo;offsite&rdquo;? If &ldquo;snoozefest&rdquo; or &ldquo;waste of time&rdquo; are the first words to come to mind, <a href="https://www.inc.com/antonio-neves/4-ways-to-to-run-an-offsite-that-wont-become-a-snoozefest.html">you&rsquo;re not alone</a>. It&rsquo;s easy for company offsites to devolve into extra-long status meetings complete with cold coffee and mini water bottles. It&rsquo;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.&nbsp;
<h2>Nail down your goals</h2>
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&rsquo;s essential to get your attendees to rally around shared objectives before you even go. <a href="https://hbr.org/2019/07/6-tips-for-running-offsites-that-arent-a-waste-of-time">Here are a few ideas</a> to get you started:

<ul>
<li style="font-weight: 400;" aria-level="1">Promote reflection on last year&rsquo;s performance and facilitate structured discussions around how it can be improved this year</li>
<li style="font-weight: 400;" aria-level="1">Work together to establish critical priorities and KPIs that the entire team commits themselves to</li>
<li style="font-weight: 400;" aria-level="1">Generate a plan for achieving strategic goals with the help of leaders from multiple teams</li>
<li style="font-weight: 400;" aria-level="1">Build rapport among remote team members who have never met each other or rarely worked together, even in the office</li>
</ul>

Of course, when you craft your agenda, you&rsquo;ll want to delve into more specific topics, such as &ldquo;sales strategies to hit $X in revenue by the end of next year&rdquo; or &ldquo;solidify the roadmap to launch X new product.&rdquo; 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.
<h2>Get feedback ahead of time</h2>
Not everyone will be present at the offsite, but <a href="https://fundersclub.com/blog/2017/04/27/guide-to-offsites/">that doesn&rsquo;t mean their opinions shouldn&rsquo;t be heard</a>. 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&rsquo;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&rsquo; creative juices flowing.
<h2>Set an agenda</h2>
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. <a href="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&amp;utm_medium=&amp;utm_term=&amp;utm_content=&amp;utm_campaign=">Agendas also ensure that you cover everything you want to</a>. With so many things happening, it&rsquo;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 <a href="https://medium.com/ideo-stories/eight-tips-on-running-a-great-team-offsite-14d8d42a91bb">pays dividends in terms of people&rsquo;s participation and creativity</a>.&nbsp;
<h2>Limit the number of people</h2>
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 href="https://www.atlassian.com/blog/inside-atlassian/how-to-facilitate-successful-offsite-meetings-human-dynamics">a group of 5 - 10 people</a>, 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&rsquo;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.
<h2>Get out of the office</h2>
It&rsquo;s tempting for startups to hold offsites at their office to save money, but that&rsquo;s a mistake. Even the word &ldquo;offsite&rdquo; 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&rsquo;s an investment, but your employees will be excited to get away for a few days and enjoy each other&rsquo;s company. That said, <a href="https://www.inc.com/alexa-von-tobel/how-to-run-an-effective-team-offsite.html">the place you choose should limit distractions</a> 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&rsquo;ll get a discount.
<h2>Talk about your people</h2>
&ldquo;Talk about your people&rdquo; sounds like a gossip fest, but that&rsquo;s not what this is about. If you&rsquo;re planning for the next few years, you&rsquo;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 <a href="https://review.firstround.com/use-this-startups-playbook-for-running-impactful-virtual-offsites">should have a pathway for success</a>一whether that be at your company or elsewhere.
<h2>Infuse some fun</h2>
Don&rsquo;t forget to make the offsite at least a little fun! You don&rsquo;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&rsquo;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&rsquo;t feel like your usual office culture. The whole point of an offsite is to stimulate people&rsquo;s brains, foster some team building, and get everyone jazzed about the future of your company.
<h2>Wrap up with accountability</h2>
Your offsite can&rsquo;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&rsquo;ll hold each other accountable, whether that&rsquo;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&rsquo;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&rsquo;re taking away from each session.&nbsp;

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&rsquo;d love to hear them!

Company offsites can inspire, motivate, and align your teams towards shared goals and prepare them for times of high growth.

The Anatomy of a Good Offsite

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, <a href="https://www.entrepreneur.com/article/79798">you&rsquo;ll be glad you established them early</a>. 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.&nbsp;
<h2>What&rsquo;s the difference between vendor procurement and vendor management?</h2>
Vendor procurement and vendor management go hand-in-hand, but they aren&rsquo;t the same thing. Vendor procurement is a method of <a href="https://zipordering.com/en/procurement-process/vendor-procurement.html">assessing potential vendors, lowering purchase costs, and ensuring that companies enter into contracts with minimal risk</a>. 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.&nbsp;
Vendor management is about <a href="https://www.linkedin.com/pulse/vendor-management-procurement-whats-difference-agostino-carrideo/">getting the most bang for your buck</a>. 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&rsquo;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&rsquo;s quality of service. Vendor procurement and vendor management processes need to be complementary to make fulfillment efficient and effective.
<h2>Benefits to proper vendor procurement and vendor management</h2>
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:
<ul>
<li style="font-weight: 400;" aria-level="1">Business continuity and risk management - Imagine if your email went down, Slack no longer worked, and Salesforce wouldn&rsquo;t load. That&rsquo;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&rsquo;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.</li>
</ul>
&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Cost savings - After a big fundraise, it&rsquo;s tempting to tell employees they can buy whatever they need whenever they want to. But reckless spending won&rsquo;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&rsquo;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 <a href="https://boringstartupstuff.com/newsletter/the-cash-flow-manifesto">cash flow management</a>.</li>
</ul>
&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Projects professionalism - Most startups aim to IPO or get acquired by a large enterprise. And if you&rsquo;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&rsquo;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&rsquo;d be a shame if you can&rsquo;t get past their procurement evaluation process because of your own. Consider using a service like <a href="https://safebase.io/">Safebase</a> to convey the current state of your security, compliance, and procurement practices.</li>
</ul>
&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Increased efficiency - Startups buy tools and services to save them time. That&rsquo;s why it&rsquo;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&rsquo;t have to guess what steps to take before signing a contract一it&rsquo;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.&nbsp;</li>
</ul>
<h2>Getting started with vendor procurement and management</h2>
Vendor procurement and management don&rsquo;t have to be arduous. The key is to start simple with these five tips:
&nbsp;
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 <a href="https://medium.com/@ProcureDesk/purchase-order-process-for-your-startup-complete-guide-7886284ec99d">what employees can purchase on their own and from where</a>. 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.
&nbsp;
2. Establish an approval process - For larger purchases, you&rsquo;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.
&nbsp;
3. Compile a list of all vendors - It&rsquo;s impossible to manage vendors you didn&rsquo;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&rsquo;s account manager, number of internal users, and cost. In tandem, create a folder in google drive to store contracts and SOC audits.&nbsp;
&nbsp;
4. Review your list regularly - Once you feel your list and folder are complete, schedule annual or bi-annual reviews. <a href="https://www.business.com/articles/procurement-tips-small-business/">Not every product will live up to expectations</a>, 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.
&nbsp;
5. Use a vendor to help - Vendor procurement and management may not naturally be in your wheelhouse, and that&rsquo;s ok. There are <a href="https://welpmagazine.com/27-best-procurement-startups-taking-the-industry-by-storm/">plenty of burgeoning startups</a> 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.
&nbsp;
<h2>It's Never Too Early To Establish Vendor Management Processes</h2>
Vendor procurement and vendor management usually sit on the back burner. After all, it&rsquo;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&rsquo;re 20 years old一<a href="https://www.scmsp.com/RafaelMarreroWhite%20paper-SpotswoodConsulting.pdf">the dividends will pay off</a>.

Well-designed vendor procurement and management processes cut costs, set companies up for successful SOC2 audits, and mitigate future risks.

Vendor Procurement and Management at a Startup

Well-designed vendor procurement and management processes help cut costs, set companies up for successful SOC2 audits, and mitigate future risks.

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&rsquo;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 <a href="https://startupgraveyard.io/">startup graveyard</a>. Here is our cash flow manifesto.&nbsp;
<h2>Establish Spending Habits Early On</h2>
<ul>
<li style="font-weight: 400;" aria-level="1">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.</li>
<li style="font-weight: 400;" aria-level="1">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.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Use corporate spend management tools like <a href="https://www.brex.com/">Brex</a> or <a href="https://getdivvy.com/">Divvy</a>.</li>
<li style="font-weight: 400;" aria-level="1">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.&nbsp;</li>
</ul>
<h2>Automate Accounts Receivable</h2>
<ul>
<li style="font-weight: 400;" aria-level="1">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 <a href="https://stripe.com/">Stripe</a>.</li>
<li style="font-weight: 400;" aria-level="1">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.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">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.&nbsp;</li>
</ul>
<h2>Be Tactical About Accounts Payable&nbsp;</h2>
<ul>
<li style="font-weight: 400;" aria-level="1">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.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Request invoices for all services rendered or purchased when available. This may not always be available, but don&rsquo;t shy away from asking for special treatment from a vendor.</li>
</ul>
<h2>Build Cash Reserves&nbsp;</h2>
<ul>
<li style="font-weight: 400;" aria-level="1">If you are raising a round, allocate 3 months of burn (Payroll + Rent + OpEx) to your balance sheet for a rainy day.</li>
<li style="font-weight: 400;" aria-level="1">Forecasting cash flow works up to a point. To be of any value, modeling future cash flow must account for different scenarios.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Seek being <a href="http://www.paulgraham.com/aord.html">default alive</a>. 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.</li>
</ul>
<h2>Get Professional Help</h2>
<ul>
<li style="font-weight: 400;" aria-level="1">Try working with a bookkeeper from day one. Companies like <a href="https://bench.co/">Bench</a> and <a href="https://pilot.com/">Pilot</a> 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.</li>
<li style="font-weight: 400;" aria-level="1">Spend time educating yourself on the <a href="https://corporatefinanceinstitute.com/resources/knowledge/accounting/three-financial-statements/">three financial statements</a> and accounting basics. As a resource, I strongly recommend the courses available at <a href="https://www.asimplemodel.com/">A Simple Model.</a> 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.</li>
</ul>
Build process from day one around managing cash flows. Set a weekly meeting to review your P&amp;L, implement corporate spending policies, and automate where possible. Invest in financial literacy immediately, it will pay dividends. Don&rsquo;t forget that cash is king.

Cash is the lifeblood of an early-stage startup, so improperly managed cash flow can take down a startup before it's had the chance to grow.

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.

Product-led growth, or PLG, sounds self-explanatory. Your product evolves over time, and growth follows, right? If you&rsquo;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&rsquo;s turned several small startups into <a href="https://growthhackers.com/articles/going-viral-how-dropbox-used-product-led-growth-strategy-to-hit-10b-in-10-years">behemoths like Dropbox</a> and <a href="https://venturedesktop.substack.com/p/the-rise-of-product-led-growth">Shopify</a>.

So what does this nebulous term mean, and how can it boost your growth? Below, we&rsquo;ll define product-led growth, explain how to structure your startup with PLG in mind, and share a few examples of companies that <a href="https://www.mehtaphysical.com/6-things-i-learned-about-plg-and-customer-success/">used PLG to achieve unicorn status</a>.

<h2>What is Product-Led Growth?</h2>
Product-led growth is an approach to expansion that&rsquo;s focused on <a href="https://openviewpartners.com/blog/what-is-product-led-growth/#.YJ069fdHYlQ">delivering an exceptional end-user experience</a>.&nbsp; You need an incredible product&mdash;so unbelievable that users can&rsquo;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&rsquo; 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&rsquo; 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.

<h2>Benefits to Product-Led Growth as a Strategy</h2>
Ok, so we&rsquo;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:&nbsp;
&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">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 <a href="https://openviewpartners.com/productbenchmarks/">2020 SaaS Product Benchmarks Report</a> 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.</li>
</ul>
&nbsp;&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">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.&nbsp;</li>
</ul>
&nbsp;
<ul>
<li aria-level="1">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&rsquo;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.&nbsp;</li>
</ul>
&nbsp;
<ul>
<li aria-level="1">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.</li>
</ul>

<h2>What Does Product-Led Growth Look Like in Practice?</h2>
In PLG, paying attention to the product isn&rsquo;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&rsquo; work. Let&rsquo;s take a look at how:
&nbsp;
<h3>The Role of Product in Product-Led Growth&nbsp;</h3>
The fact that &ldquo;product&rdquo; is the first word in product-led growth is a dead giveaway that it&rsquo;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&rsquo;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.
&nbsp;
<h3>The Role of Marketing in Product-Led Growth</h3>
The PLG marketer&rsquo;s goal is to create <a href="https://thepathforward.io/how-use-product-loops-supercharge-your-startup/">&ldquo;viral loops&rdquo; in which end-users rave about and share the product endlessly</a>. It&rsquo;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.
&nbsp;
<h3>The Role of Customer Success in Product-Led Growth</h3>
Customer success teams bring a lot to the PLG table. Their job is to <a href="https://www.trychameleon.com/blog/product-led-growth">make users successful at using the product without much help</a>. 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.
&nbsp;
<h3>The Role of Sales in Product-Led Growth</h3>
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 <a href="https://visible.vc/blog/product-led-growth/">use the product to qualify prospects for them</a>. They pay attention to how leads are using the product, demoing how the paid version of the product can fit the leads&rsquo; needs even better. Instead of just talking about future value like a traditional SaaS salesperson, PLG sales reps <a href="https://userpilot.com/blog/product-led-growth-marketing/">drive conversion by actually showing it</a>. Oftentimes, sales reps are the last hires at a PLG organization.

<h2>Other Pieces of the Product-Led Growth Puzzle</h2>
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:
&nbsp;
1. Virality - If you look at product-led companies, you&rsquo;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&rsquo;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.&nbsp;&nbsp;
&nbsp;
2. Minimizing Friction - PLG products should be <a href="https://sujanpatel.com/saas/product-led-growth/">cheap (basically free), frictionless, and easy to learn</a>. 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&rsquo;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&rsquo;s value on their own.
&nbsp;
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&rsquo;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&rsquo;s even more critical to maximize value ASAP.
&nbsp;
<h2>Examples of Product-Led Growth Companies</h2>
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:
&nbsp;&nbsp;
<a href="https://discord.com/">Discord</a> - If you&rsquo;re at all into games, you&rsquo;ve heard of Discord. It&rsquo;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&rsquo;s attention一<a href="https://www.theverge.com/2021/3/26/22352028/microsoft-discord-acquisition-analysis-report">Microsoft was thinking about acquiring them</a> earlier this year.
&nbsp;&nbsp;
<a href="https://www.xero.com/">Xero</a> - Xero is probably on your radar if you&rsquo;re an accountant for a small to medium-sized business. It&rsquo;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&rsquo;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 href="https://www.xero.com/au/partner-programs/partners/partner-program/">a program that still exists today</a>. In 2021, <a href="https://www.xero.com/us/about/">Xero boasts over 2M users</a> with a <a href="https://finance.yahoo.com/quote/XRO.AX/">market cap of roughly $16.7B</a>.
&nbsp;
We&rsquo;ve concentrated on PLG in B2B companies, but it&rsquo;s worth mentioning that many B2C companies such as Bumble, Pinterest, and Venmo were already doing PLG before it was even a &ldquo;thing.&rdquo;
<h2>Product-Led Growth for Startups</h2>
Product-led growth doesn&rsquo;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&rsquo;t excellent.&nbsp;
A product-led growth strategy isn&rsquo;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.

The product-led growth framework triggers rapid growth, decreases cash burn, and attracts diehard fans.

Product-led companies are characterized by rapid growth, little cash burn, and diehard fans.

Product-led companies are characterized by rapid growth, little cash burn, and diehard fans, but those results only come to those that follow the product-led growth framework.

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

Since 2017, the median seed funding for a new startup has <a href="https://medium.com/the-mission/state-of-seed-investing-in-2018-25eb28ac0e93">risen by over 30% to $2.2 million</a>. 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 <a href="https://www.investopedia.com/terms/c/capitalization-table.asp">capitalization table</a> (cap table) at least quarterly, they are likely already sending you emails requesting updates.&nbsp;

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&rsquo;s examine how some startups are handling investor relations today.&nbsp;

<h2>How do startups deal with investor updates?</h2>
At NYC-based recruiting tech startup, <a href="https://www.recruitifi.com/">Recruitifi</a>, the IR process is a team sport. Recruitifi&rsquo;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&nbsp; with itemized metrics. Before the C-suite sends the letter, they ask department heads for feedback.&nbsp;

While quarterly updates work for some teams, others find their investors are more content with a monthly update. CEO &amp; Founder, Ben Mackinnon, spent early years at <a href="https://www.getkard.com/">Kard</a> 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&nbsp; 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 <a href="https://nextcaller.com/">Next Caller</a>, notes, &ldquo;[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.&nbsp; 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.&rdquo;&nbsp;

<h2>What information should be included in your investor updates?</h2>
Most investors want to see the numbers. While color commentary on what has gone on in the recent period is important, it&rsquo;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 <a href="https://en.wikipedia.org/wiki/Gross_merchandise_volume">GMV</a>, 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 <a href="https://thehustle.co/07312020-transparent-startups/">the rise of hyper-transparent startups</a> 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 &ldquo;treating employees like adults and being candid...builds a tremendous amount of trust and confidence,&rdquo; enough to outweigh any risks.

&ldquo;Don't be shy to share bad news, as your investors want you to succeed and can hopefully help you in tough situations,&rdquo; Mackinnon says. Investor updates shouldn&rsquo;t obscure what is going on at the company. Use these letters as an opportunity to seek advice from your supporters.
<h2>What are some tools and tips for building a robust IR process?</h2>
Email automation platforms like <a href="https://mailchimp.com/">Mailchimp</a> 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.&nbsp;

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 <a href="https://www.docsend.com/">DocSend</a>. With DocSend, you can track who has opened or forwarded the document. While this helps, it is not a silver bullet. &ldquo;Assume everything you send to your investors will get forwarded on to people [who] you don't want to see it,&rdquo; 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&mdash;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 <a href="https://www.mongodb.com/products/charts">MongoDB Charts</a>. For those using relational databases, we recommend starting with simple tools like <a href="https://redash.io/">Redash</a>.&nbsp;

SaaS companies that rely on automated billing platforms like Stripe or Chargebee can also benefit from tools such as <a href="https://www.profitwell.com/">Profitwell</a>. 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.

<h2>Good Investor Relations can be the key to future growth</h2>

Keep your cap table &ldquo;clean&rdquo;. The fewer, more professional investors on your cap table generally leads to a simpler investor relations process. You don&rsquo;t want to chase down hundreds of investors for signatures when it comes time to sell your business. Similarly, you don&rsquo;t want to be answering detailed questions late into the night from the dozens of investors that wrote you $5,000 checks. Avoid <a href="https://blog.samaltman.com/party-rounds">party rounds</a>, and aim for bigger checks early to reduce the number of hands in the pot.&nbsp;

Lastly, be proactive. Do not wait for requests for information from your board or cap table members. &ldquo;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, &rdquo; Roncoroni says.

Consistent updates lead to trust, and trust is what builds the foundation of strong relationships.&nbsp;

Writing investor updates consistently is important for company success. Startup founders use different tools and processes for updating inve

Investor Relations For Startup Founders

Writing investor updates consistently is important for company success. Startup founders use different tools and processes for updating investors. Learn how to set up an investor relations process.

According to IBM, data breaches <a href="https://digitalguardian.com/blog/whats-cost-data-breach-2019">cost US companies $8.19 million on average</a>. Sadly, this number is only growing. GovTech magazine found that the total number of records compromised in 2020 <a href="https://www.govtech.com/blogs/lohrmann-on-cybersecurity/2020-data-breaches-point-to-cybersecurity-trends-for-2021.html">exceeded 37 billion, a whopping 141% increase from 2019</a>. Scary, huh?

But guess who is even more scared about a data breach than you? Your clients. Convincing them the data you&rsquo;re storing for them is safe and sound is hard to do. Just saying you&rsquo;ve never had a breach in the past doesn&rsquo;t persuade them that one won&rsquo;t happen in the future. Luckily, there&rsquo;s a (laborious, lengthy) certification that can help: SOC 2.

If you&rsquo;ve ever worked at a SaaS company, you&rsquo;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&rsquo;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.
<h2>A bit of SOC 2 history</h2>
At their core, audits assess companies&rsquo; 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) <a href="https://www.blissfully.com/guides/soc-2-compliance/">began to think about information security more generally</a>, 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.
<h2>But what is SOC 2, really?</h2>
SOC 2 is a framework that validates an organization&rsquo;s internal data center controls and other security-related operations that preserve client privacy. While that sounds simple in theory, it&rsquo;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&rsquo;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.
<h3>The 5 &ldquo;Trust Service Principles&rdquo;</h3>
Now, you can&rsquo;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:

<ol>
<li style="font-weight: 400;" aria-level="1">Security - Security is the <a href="https://info.cgcompliance.com/blog/what-is-soc-2">minimum requirement for a SOC 2 audit</a> 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&rsquo;re doing an audit for the first time, most auditors will recommend focusing on Security only.&nbsp;</li>
</ol>

<ol>
<li style="font-weight: 400;" aria-level="1">Availability - Availability proves how accessible your system is. In layman&rsquo;s terms, this means your software works when it&rsquo;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.</li>
</ol>

<ol>
<li style="font-weight: 400;" aria-level="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.&nbsp;</li>
</ol>

<ol>
<li style="font-weight: 400;" aria-level="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.</li>
</ol>

<ol>
<li style="font-weight: 400;" aria-level="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.</li>
</ol>
<h2>Do startups need SOC 2?</h2>
Now that you know what SOC 2 is, it&rsquo;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&rsquo;t working in healthcare or financial services, SOC 2 is often a <a href="https://www.imperva.com/learn/data-security/soc-2-compliance/">critical component of enterprise decision-making</a>. If you&rsquo;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&rsquo;s ability to protect their data.
<h2>A SOC 2 preparation checklist</h2>
Let&rsquo;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:&nbsp;

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:
<ul>
<li style="font-weight: 400;" aria-level="1">A list of all employees, their roles, and their job descriptions</li>
<li style="font-weight: 400;" aria-level="1">Background check reports</li>
<li style="font-weight: 400;" aria-level="1">Signed copies of Codes of Conduct</li>
<li style="font-weight: 400;" aria-level="1">Org charts</li>
<li style="font-weight: 400;" aria-level="1">Board meeting minutes</li>
<li style="font-weight: 400;" aria-level="1">Instances of non-compliance</li>
</ul>

Communications - How do you inform your employees and clients of security updates and changes to your product and internal systems? Begin assembling:
<ul>
<li style="font-weight: 400;" aria-level="1">A list of all internal systems your company uses</li>
<li style="font-weight: 400;" aria-level="1">Employee security training modules</li>
<li style="font-weight: 400;" aria-level="1">An incident response policy</li>
<li style="font-weight: 400;" aria-level="1">Customer agreements (MSAs, SLAs)</li>
<li style="font-weight: 400;" aria-level="1">Release schedule(s)</li>
</ul>

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:
<ul>
<li style="font-weight: 400;" aria-level="1">A Risk Treatment Plan and Risk Assessment Procedures</li>
<li style="font-weight: 400;" aria-level="1">A list of monitoring software</li>
<li style="font-weight: 400;" aria-level="1">Vulnerability scan reports</li>
<li style="font-weight: 400;" aria-level="1">Annual Pen test reports</li>
<li style="font-weight: 400;" aria-level="1">Incident management ticket samples and documentation</li>
<li style="font-weight: 400;" aria-level="1">Root cause analysis samples</li>
<li style="font-weight: 400;" aria-level="1">A list of all previous security incidents</li>
<li style="font-weight: 400;" aria-level="1">Capacity monitoring reports</li>
<li style="font-weight: 400;" aria-level="1">Employee termination checklist</li>
<li style="font-weight: 400;" aria-level="1">Proof of full disk encryption on employee laptops</li>
<li style="font-weight: 400;" aria-level="1">Intrusion Detection Service and Production Firewall reports</li>
<li style="font-weight: 400;" aria-level="1">Copies of your internal employee directory (LDAP, Google Workspaces etc.)</li>
<li style="font-weight: 400;" aria-level="1">Proof of Business Continuity and IT Disaster Recovery Programs</li>
<li style="font-weight: 400;" aria-level="1">All third-party vendor agreements in a vendor management program, along with a list of all the admins of those tools</li>
</ul>

Confidentiality - How does your company manage sensitive data? Show that you have:
<ul>
<li style="font-weight: 400;" aria-level="1">A Data Retention Policy</li>
<li style="font-weight: 400;" aria-level="1">A Data Classification Policy</li>
<li style="font-weight: 400;" aria-level="1">A Data Disposal Policy</li>
<li style="font-weight: 400;" aria-level="1">A way to train employees on sensitive data</li>
<li style="font-weight: 400;" aria-level="1">Evidence of customer contracts with sections related to the treatment of confidential data</li>
</ul>
<h2>A SOC 2 marketplace ready to help</h2>
As you might imagine, many people have put significant time and effort into making this arduous process simpler. Thankfully, they&rsquo;ve been working on this problem for a while, so there&rsquo;s a marketplace for SOC 2 readiness software and a suite of compliance auditors to choose from. Here are just a few go-to&rsquo;s:

For preparation:
<ul>
<li style="font-weight: 400;" aria-level="1"><a href="https://secureframe.com/products/soc-2">Secureframe</a>: Secureframe is a compliance automation software that boils down the complicated SOC 2 audit process into seven key steps. They&rsquo;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&rsquo;s a Series A startup co-founded by a woman一we love to see it.</li>
<li style="font-weight: 400;" aria-level="1"><a href="https://www.vanta.com/products/soc-2">Vanta</a>: 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&rsquo;s systems every hour to guarantee compliance over time.</li>
</ul>

For auditing:
<ul>
<li style="font-weight: 400;" aria-level="1"><a href="https://www.armaninollp.com/">Armanino</a>: Armanino LLP is one of the 25 largest accounting and business consulting firms in the US and works directly with Tugboat Logic&rsquo;s Security Assurance Platform to provide an integrated security audit process. With the help of experienced consultants and Tugboat&rsquo;s integration capabilities, Armanino can give organizations the feedback they need to efficiently and independently obtain the SOC 2 certification.</li>
<li style="font-weight: 400;" aria-level="1"><a href="https://a-lign.com/">A-LIGN</a>: 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.</li>
</ul>

Adopt a SOC 2 mindset
These days, Fortune 500 companies will simply shoot down the sales process outright if you don&rsquo;t have a SOC 2 cert. And if we&rsquo;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&rsquo;ll spend on the whole process. When it comes time to do a formal audit, you&rsquo;ll want to have most of the pieces to this complex puzzle.

SOC 2 is a framework that validates an organization’s internal data center controls and other security-related operations that preserve client privacy. SOC 2 is often a critical component of enterprise decision-making, making it a must-have for startups selling into the Fortune 500

A Startup Guide to SOC 2

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.

<a href="https://en.wikipedia.org/wiki/Metcalfe%27s_law">Metcalfe's Law,</a> 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&rsquo;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&rsquo;s take a walk down the path to a robust hiring strategy and process that has worked for my teams.

<h2>Overhead walks on two legs</h2>
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 <a href="https://www.bls.gov/news.release/pdf/ecec.pdf">accounts for 68.7% of business expenses</a>. Ignoring the astronomical amount each employee adds, you need to consider the lasting impact individual personalities will have on your startup&rsquo;s trajectory. With expense in mind, there are a few questions that can help you determine if now&nbsp; is the right time to hire:
<ul>
<ul>
<li style="font-weight: 400;" aria-level="1">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.</li>
<li style="font-weight: 400;" aria-level="1">Is there a current process or workflow in place for this role? Follow along First Round&rsquo;s sage advice to <a href="https://review.firstround.com/focus-on-your-first-10-systems-not-just-your-first-10-hires-this-chief-of-staff-shares-his-playbook">hire for your first 10 processes</a>.</li>
<li style="font-weight: 400;" aria-level="1">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&rsquo;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 &lsquo;fire squad&rsquo; model一 a derivative of how Navy SEALs operate small, effective teams.</li>
<li style="font-weight: 400;" aria-level="1">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&rsquo;t truly confident money will hit the bank, then perhaps hold off.</li>
</ul>
</ul>
If you can confidently answer these questions, it is time to start laying the groundwork for your hiring process.

<h2>Who is calling the shots?</h2>
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&rsquo;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:
<ul>
<li style="list-style-type: none;">
<ul>
<li>Writing the job description</li>
<li>Selecting team members who will run the interview(s)</li>
<li>Making the final decision</li>
</ul>
</li>
</ul>
While some teams take a democratic approach to hiring, your hiring managers should have the absolute final say on a candidate.

<h2>Talking turkey</h2>
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.&nbsp;
At Next Caller, we rely on <a href="https://www.optionimpact.com/">Option Impact</a> to, at the very least, inform our compensation structures. There are similar free services out there such as <a href="https://www.glassdoor.com/index.htm">Glassdoor</a> and <a href="https://www.comparably.com/">Comparably</a>. 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.&nbsp;

<h2>Process, Process, Process</h2>
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.&nbsp;
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 <a href="https://trinsly.com/">Trinsly</a> 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&rsquo;s engineering team is as follows:
<ul>
<li style="font-weight: 400;" aria-level="1">20-30 minute phone screen with hiring manager - This often includes a few high-level technical questions and casual conversation.</li>
<li style="font-weight: 400;" aria-level="1">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).&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">45 min "On-site" technical: group interview with engineers -&nbsp; This functions as a way to meet the team and to hear the candidate discuss relevant technical topics.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">30 minute "On-site" cross-team: group interview with non-engineers - This is for the candidate to meet the team and answer questions.</li>
<li style="font-weight: 400;" aria-level="1">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.</li>
</ul>
Because we have our process dialed in and have checkpoints along the way to evaluate candidates, we can make offers very quickly.&nbsp; 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.

<h2>Communication is critical</h2>
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&rsquo;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&rsquo;t collapse under its own weight.&nbsp;
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.

Rapid hiring can lead to disastrous communication lapses unless planned for ahead of time. It is critical to have a plan of action when prospecting, interviewing and making the new hire decision.

Designing A Startup Hiring Strategy

As you add team members, your communication structure within teams becomes exponentially more complex. In practice, rapid hiring can lead to disastrous communication lapses unless planned for ahead of time.

Designing a Startup Hiring Strategy

Before a company makes its first full-time HR hire, there&rsquo;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&rsquo;ve been thinking about how to run them more efficiently. They&rsquo;re <a href="https://boringstartupstuff.com/newsletter/jan-19th-2021-avoiding-delegation-downfalls">not easy to delegate</a> and they shouldn&rsquo;t be ignored, so software seems like the next best solution. <a href="https://boringstartupstuff.com/newsletter/feb-9th-2021-perfecting-your-peo">We&rsquo;ve covered PEOs</a>, which do a great job of automating payroll, benefits, and more company infrastructure-related items. But what about the other parts of People Operations?


<h5>The Space Is Hot</h5>
It seems that I haven&rsquo;t been alone in this desire for efficiency, as a new batch of companies has popped up to fill the demand for &ldquo;people-ops-as-a-service.&rdquo; Between cold emails, LinkedIn outreach, and even responses to this newsletter (thanks, <a href="https://quid.li/">Quidli</a>!), signs show that founders are taking advantage of the new remote-first world to rethink personal interactions and push the <a href="https://www.shrm.org/hr-today/news/hr-magazine/spring2019/Pages/hr-needs-to-stay-ahead-of-automation.aspx">boundaries of what can be automated</a>.&nbsp;
<a href="https://getgrow.io/">Grow</a>, 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 <a href="https://news.gallup.com/businessjournal/814/taking-feedback-bottom-line.aspx">lower turnover and higher satisfaction</a>. Employees are still writing the content of the feedback themselves, but the Grow frameworks ensure best practices without needing to train the team.&nbsp;
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 <a href="https://membership.neuroleadership.com/material/getting-culture-feedback-science-based-strategy-improve-performance-scale/">more likely to request feedback</a> from one another, reply to feedback after it is given, and <a href="https://www.amazon.com/dp/B081Y3R657">share feedback</a> 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.


<h5>When To Automate HR</h5>
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. <a href="https://www.teamgather.co/">Gather</a>, an agile team creating <a href="https://www.teamgather.co/people-operations-playbook">people operations workflows</a> (think work anniversary reminders and onboarding buddies), is specifically built for teams who are &ldquo;eager to build the right foundations but don't have the resources to do it well.&rdquo; Cofounder, <a href="https://www.linkedin.com/in/alex-hilleary/">Alex Hilleary</a>, said of their process:

<blockquote>
All along the way, we keep a very operational mindset, helping folks think about scalability and the long run. We love to ask, &lsquo;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?&rsquo;
</blockquote>

Notice when you are beginning to repeat processes and <a href="https://www.inc.com/jeff-haden/how-to-automate-your-business.html">use those as the starting point</a> for what to automate. Onboarding is a common focus because it&rsquo;s extremely <a href="https://readwrite.com/2020/10/19/the-key-to-scaling-company-culture-is-automating-employee-onboarding/">telling of your company culture</a> and every new employee will experience it. The point should not be to eliminate tasks, rather to make more comprehensive and repeatable processes.

<h5></h5>
<h5>When Not to Automate</h5>
When Facebook first offered the option to automatically post birthday wishes on a friend&rsquo;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.&nbsp;
<a href="https://www.linkedin.com/in/ryansydnor/">Ryan Sydnor</a>, Cofounder at <a href="http://getgrow.io">Grow</a>, 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. <a href="https://www.asaporg.com/the-value-of-empathy-in-the-workplace">Empathy goes a long way</a> 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.


<h5>The Future of People Operations</h5>
So what does the future of automating People Operations look like? <a href="https://www.linkedin.com/in/christina-rosivack/">Christina Rosivack</a>, Director of Customer Success at <a href="https://www.goethena.com/">Ethena</a> &mdash; a company tackling harassment prevention training &mdash; predicts continued growth in tech giving early-stage companies access to benefits previously reserved for larger, more developed organizations. She went on to add:

<blockquote>
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&rsquo;s a <a href="https://www.forbes.com/sites/kaytiezimmerman/2017/10/01/5-things-we-know-millennials-want-from-a-job/?sh=509a0d0d7809">greater desire for benefits that align with personal values</a>, but the overhead of these tools can be exorbitant for a small team. Tools bridging this gap help companies better retain top talent.
</blockquote>
 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 <a href="https://www.itproportal.com/features/five-ways-to-create-an-automation-friendly-culture/">automation-friendly culture</a>, a human will always be in the loop to <a href="https://www.linkedin.com/posts/johnwetzel2_gather-design-your-company-culture-activity-6785539641429807105-h0Pv/">design the process</a>. Automation may just help us remember what we decide matters. <a href="https://boringstartupstuff.com/newsletter/feb-16th-2021-creating-company-culture">Focus on getting the culture right</a> and let the machines take it from there.

A new batch of companies is filling the demand for “people-ops-as-a-service," automating onboarding, feedback, and company culture.

When Robots Have Feelings

Founders are taking advantage of the new remote-first world to rethink personal interactions and push the boundaries of what can be automated. Enter: “people-ops-as-a-service.”

Fortune 500 companies <a href="https://econreview.berkeley.edu/stocks-sustainability-how-they-relate/">spend $20 billion on Corporate Social Responsibility (CSR) efforts collectively</a>, 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&rsquo;t have to be grandiose. Your CSR program <a href="https://www.business.com/articles/can-you-make-a-profit-and-be-socially-responsible/">can have humble beginnings</a>: 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&rsquo;s mission.

Startups are <a href="https://sociable.co/technology/why-startups-should-embrace-csr-initiatives-from-day-one/">prime candidates for CSR</a>. 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&rsquo;ll define CSR and why VCs care and discuss the many ways your startup can benefit from it.
<h2>What is CSR?</h2>
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 <a href="https://www.unido.org/our-focus/advancing-economic-competitiveness/competitive-trade-capacities-and-corporate-responsibility/corporate-social-responsibility-market-integration/what-csr">&ldquo;triple bottom line.&rdquo;</a> There isn&rsquo;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&rsquo;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 <a href="https://www.iplaylikeagirl.org/">Play Like a Girl</a>. 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&rsquo;s. They put corporate responsibility at the <a href="https://www.benjerry.com/values">center of their strategy</a>, formally reporting on social responsibility when they had <a href="https://danielsethics.mgt.unm.edu/pdf/ben-and-jerry-case-.pdf">fewer than 1,000 employees</a>. Now, CSR is simply part of the Ben and Jerry&rsquo;s brand. Besides speaking out <a href="https://www.benjerry.com/about-us/media-center/dismantle-white-supremacy">against racial injustices last summer</a>, Ben and Jerry&rsquo;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&rsquo;s is a <a href="https://ssir.org/articles/entry/the_truth_about_ben_and_jerrys">global brand owned by Unilever</a>. 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.
<h2>Investors care about corporate social responsibility</h2>
VCs, philanthropists, and angel investors increasingly want to make a difference in the world. ESG (Environmental, Social, and Governance) investors, for instance, devoted <a href="https://www.barrons.com/articles/impact-investing-market-expands-to-715-billion-survey-says-51591873206">$715 billion worth of assets in April 2020</a>, a 42.4% increase from 2019. There are also <a href="https://sociable.co/technology/why-startups-should-embrace-csr-initiatives-from-day-one/">plenty of impact-focused accelerators</a>, including The Social Impact Accelerator (SIA) in Europe and The Social Enterprise Alliance in the United States.

Even investors who don&rsquo;t invest exclusively in CSR-focused companies might include social responsibility as one aspect of their thesis. They&rsquo;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.
<h2>Socially responsible startups do better in the long run</h2>
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.

<ul>
<li style="font-weight: 400;" aria-level="1">Higher margins - In recent years, shopping responsibly has skyrocketed in popularity. <a href="https://www.nielsen.com/wp-content/uploads/sites/3/2019/04/Global20Sustainability20Report_October202015.pdf">A 2019 Nielson report</a> 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%.&nbsp;</li>
</ul>

<ul>
<li style="font-weight: 400;" aria-level="1">Pricing power - What is more, <a href="https://www.inc.com/melanie-curtin/73-percent-of-millennials-are-willing-to-spend-more-money-on-this-1-type-of-product.html">66% of customers</a> 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.&nbsp;</li>
</ul>

<ul>
<li style="font-weight: 400;" aria-level="1">Feel-good PR -&nbsp; Consumers are demanding ethical practices from the companies they patron, so much so that <a href="https://www.entrepreneur.com/article/314156">81% of Millennials</a> expect companies to publicly declare their corporate citizenship. Publicly broadcasting CSR efforts bolsters your startup&rsquo;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&rsquo;ll become unbeatable.</li>
</ul>

<ul>
<li style="font-weight: 400;" aria-level="1">Engaged employees - Employees don&rsquo;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 <a href="https://www.conecomm.com/news-blog/2016-cone-communications-millennial-employee-engagement-study-press-release">62% of Millennials are willing to take a pay cut</a> to work for a responsible company. And <a href="https://hbr.org/2018/01/stop-talking-about-how-csr-helps-your-bottom-line">research shows</a> 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&rsquo; wage demands. Plus, CSR programs are a magnet for talent. In 2019, <a href="https://www.fastcompany.com/90306556/most-millennials-would-take-a-pay-cut-to-work-at-a-sustainable-company">40% of Millennials</a> said that they chose a job because the company performed better on sustainability than alternatives.</li>
</ul>
<h2>What startups are doing CSR successfully?</h2>
A quick google search will reveal there are <a href="https://angel.co/corporate-social-responsibility-management">plenty of startups</a> adopting CSR methodology. Here are just a few we&rsquo;d like to highlight:

<ul>
<li style="font-weight: 400;" aria-level="1"><a href="https://www.joinpaladin.com/">Paladin</a> - Paladin is a legal tech startup that streamlines the manual pro bono processes that disproportionately harm communities of color. Paladin&rsquo;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 <a href="https://www.hutchlaw.com/blog/whats-the-difference-between-a-public-benefit-corporation-and-a-b-corp-certification">Public Benefit Corporation (PBC)</a>. This means they cited one or more specific public benefits in their charter&rsquo;s statement of purpose, and use it as a North Star for any future business decisions.&nbsp;</li>
</ul>

<ul>
<li style="font-weight: 400;" aria-level="1"><a href="https://www.fiixsoftware.com/">Fiix</a> - 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&rsquo;s Corporate Social Responsibility Manager details their journey in this <a href="https://medium.com/@Fiix/what-i-learned-from-introducing-corporate-social-responsibility-into-a-startup-42eeac13698">informative article</a>.</li>
</ul>

<ul>
<li style="font-weight: 400;" aria-level="1"><a href="https://www.ecosia.org/">Ecosia</a> - Ecosia is a search engine that donates over 80% of its profits to reforestation. Users search the web with Ecosia&rsquo;s Chrome extension, and the ads generate income used to plant trees. Ecosia is CO₂-negative, supports <a href="https://blog.ecosia.org/ecosia-financial-reports-tree-planting-receipts/">full financial transparency</a>, and protects its users&rsquo; privacy. In 2014, Ecosia became the first German B Corp, and by 2019 it planted 60 million trees.&nbsp;</li>
</ul>
<h2>Being genuine matters</h2>
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, <a href="https://hbr.org/2018/01/stop-talking-about-how-csr-helps-your-bottom-line">they&rsquo;ll react negatively and put in far less effort</a>. So remember, with CSR comes prospective investors, happy customers, a better world, and一of course一great responsibility.

Startups are prime candidates for CSR because as they grow, so too can their positive contributions to society. And beyond making the world a better place, CSR programs strengthen culture, lure in customers, retain talent, support public image, and attract investors.