Adverse times can present opportunities. Harnessed correctly, they can boost entrepreneurship and the creation of new business. The state in which we are all living, confined to small spaces, restrained from leisure, will spark the imagination. Also, with rising unemployment people will be encouraged to create their job. There can be a positive outcome to trying times. We have seen manifestos for building, suggesting that the best way to prevent a new pandemic is by building a solution to fight it. The most exciting piece was probably Marc Andersen's article It's Time to Build.
With the thought of building in mind, I want to share a few topics that I believe will increasingly become the norm for creating companies. It started as a list of five, but I've added a few more as a bonus.
Embrace Remote Work
If there was a thing that COVID times showed us is this: offices are overrated. We learned that we could be more productive working from home, enjoy more family time, and avoid all the distractions that we usually have in an office. We also can’t ignore that people are weary of the obligation to always go to an office. They want the opportunity to choose [1]. Always bear in mind: remote work isn't something new. The benefits you can get from it are widely known, and now we've all learned that it's beautiful to work remotely in a LOT of cases.
If you are starting a company now, consider remote-first, or at least remote-friendly. Don't restrain your team to a specific location. What you spend in an office, you can invest in gatherings, team culture and other stuff.*
Default to transparency
Recently I've been part of the hiring process for Coverflex. I helped with the first hires, mainly on the product team side. One of the things that I've seen everyone point out as a primary factor in joining the company was the fact that it abides by a "Default to Transparency" principle. This means that everything that doesn't strictly need to be private is public to everyone in the company. From management meetings that any employee can join at any moment to all the documentation available on your favorite documentation tool. This a powerful motivational tool to hire and maintain people. Speaking from personal experience, it's also super liberating. If you do it from the get-go, there is no burden of transforming sensitive information into public information in the company. As a CEO, it kind of feels that you are traveling lighter.
I believe that, more and more, employees want to be part of the whole story and not just an appendix. They want the good, the bad and the ugly. Companies that offer radical transparency models will have the edge over other companies that still like to operate in obscurity. Consider having all information open to the company from day zero. It's simpler than turning it public later on.
Share the upside with your team
This seems like a no brainer, but, unfortunately, a lot of founders are still avoiding this, or procrastinating on this decision. I know I have been complacent myself about taking such steps in the past. This is simple: if you want great talent, you will have to share the upside.
This doesn't mean trading equity for lower salaries. Equity is a future promise of reward that people trade for the time of their life and energy that your employees have invested in you and your company. It should not be confused with their monthly salary.
Have equity, future earnings, bonuses, or whatever you’re offering in place from the beginning. Start with something, and tweak it if needed. The important thing to keep in mind is that joining your company has an opportunity cost for your employees. If you don't reward that, they will not participate or will not stick around for a long time.
Hire slow & sell fast
Maybe you are super confident that you have a perfect idea and the ideal solution for the problem you are solving, but you will undoubtedly have to iterate several times before you nail it. Change with a large team happens slowly. Keep your team as lean as you can. It can’t be stressed enough that you should spend the necessary time to hire the best team that you can. Ensure that each hire, from the beginning, is as important and meaningful as signing a huge deal that will make you a millionaire. If you are not 100% confident with the person, or someone in your team isn't, don't risk it. Hand to hand with hiring comes selling. Start selling when you are a team of one! Keep selling along the way, train your people to sell, and then sell a bit more. The world is full of great software or hardware that no one wants to buy or use. We don't need more of those.
Keep your team as small as you can, hire only when you are 100% confident. Don't waste time on selling, start as soon as you can.
Raise money from the right people
The best way to raise money is by selling your product, hence the previous topic. However, some ventures need cash to get off the ground. But before you jump onto the bandwagon of the VC world, consider alternative VCs that are focused on profitability, like IndieVC. Or different mechanisms that are available out there. Debt may not be a terrible option, take a look here. If you still need to go into traditional Venture Capital, take the necessary precautions;
- Double check that you are not raising money from jerks;
- Make sure that the VCs values align with yours;
- Talk with current companies that they have in the portfolio;
- Find someone to help you with the legal shenanigans;
- Make sure that you and your team are respected.
I don't want to sound like a VC hater. I do acknowledge the innovation they have been driving, but I’ve been part, and heard enough, horrible stories.
I’m always eager to talk with founders starting their new ventures. If you want to discuss some of the things that I mentioned in this article or other topics, feel free book a conversation with me here.