When talking about employee benefits most people think of common things like health, dental, and 401k benefits. Lately, we’ve been talking internally about what other benefits we can provide to our team to make our environment and company that much better. Here are some of the non-standard employee benefits we already have:
Free food and drinks (the regular stuff plus nice coffees, teas, fruit juices, energy drinks, and more)
Catered lunches every Friday
Short term and long term disability with no co-pay
Quarterly off-site celebrations with food and drink
Here are some ideas we’re thinking about:
Company-sponsored personal financial education to help team members interested in things like paying off debt, buying a house, and planning for retirement
Massages and personal wellness clinics
More frequent catered lunches as well as breakfasts
More frequent Friday afternoon happy hours
What else? What are some other non-standard employee benefits that you like?
Everyone loves to try and categorize the most common types of entrepreneurs. I’d like to throw my hat in the ring. Over the past 10 years I’ve found that there are three main types of entrepreneurs:
Sales – spends a good deal of time focused on selling, doing deals, and anything else related to bringing in new business
Product – enjoys the product management, strategy, and vision aspect of the business (I’m personally in this camp)
Operations – loves the organization aspect of growing a business, the metrics, KPIs, and general execution
There’s no right or wrong answer and you can probably think of famous examples for each category (e.g. Mark Benioff, Steve Jobs, and Jack Welch). My recommendation is maximize your talents by focusing on what you’re good at and understand that it is common to excel in one or two areas.
What else? Do you agree with these three categories for entrepreneurs?
With a clean product slate as a startup it’s easy to iterate and add functionality quickly. The key to remember, especially with customer driven development, is that product development should be paced with customer input. It’s too easy to keep adding features without giving adequate time and effort to solicit feedback.
Keep these in mind when considering the pace of development:
Maintain a strong opinion of the product direction independent of prospects, analysts, customers, and competitors
When considering feature requests, always ask if it is applicable to 80% of your desired customers
Don’t be afraid to remove features or unnecessary complexity from the product if they aren’t adding value (this is a delicate area)
Keep a good pace of development and make sure clients know about new features through blog posts, dashboard updates, social media, and newsletters
My recommendation is to pace product development with customer input while maintaining a strong internal product opinion.
What else? What are some other things to keep in mind when considering the pace of development?
One of the co-founders of a startup should take ownership of the product management role. Product management encompasses everything from customer discovery, feature planning, roadmaps, QA, strategy, wireframes, documentation, and more. After building several commercial products personally, as well as helping other startups, I’ve seen a number of mistakes first-time product managers make repeatedly. Here are a few of those mistakes:
Overcomplicating the product (I still have a tendency to do this) knowing that Voltaire’s quote “the perfect is the enemy of good” holds true
Waiting too long to deploy changes out to the production server (startups should do continuous deployment or at least daily deployment otherwise it leaves room for a culture of monolithic development)
Inconsistent capitalization in button and link labeling (e.g. “Edit user” in some places but “Edit Object” in others)
Not appreciating that window dressing and subtle niceties in a UI contribute toward the user experience
Creating complicated interfaces that don’t employ progressive disclosure of advanced functionality
My recommendation is for first-time product managers to pick up a book like Designing Interfaces and really be a student of the art of building a great product.
What else? What are some other common mistakes for first-time product managers?
Testing a thesis and iterating quickly is one of the central tenants of lean startups. One of the ideas that lean startups should also employ is reaching out to many different potential types of customers while they build the product with feedback from a core group. Spraying and praying, based on educated guesses, isn’t employed as much as I would have expected.
The idea is pretty simple. Take the core value proposition of the product, with feedback from the potential prospects who’ve helped guide development, and start reaching out to other groups that might be a good fit. Ideas to try include:
Related industries/verticals
Different job titles within those industries
Factors like revenue size, number of employees, and geography
The idea is to pick out chunks of 25 contacts, pulled from LinkedIn/Jigsaw, in each potential area and start talking to people. Over time, patterns and fruitful opportunities will emerge. Once momentum has been achieved in an area, double down on it and maximize the value.
What else? What are some other ways to find potential customers?
After reading Michael Lewis’ latest book, The Big Short, this weekend it got me thinking more about junk bonds. Michael Lewis referenced his first book, Liar’s Poker, which chronicles the rise of the junk bond industry at Solomon Brothers, several times in the new book. Ted Turner’s autobiography, Call me Ted, talks about how junk bonds were the only way he could finance the growth of his empire without giving up control of his namesake business.
Why don’t we see the equivalent of a junk bond industry for startups?
Financing for startups typically revolves around angel investors (three Fs – friends, family, and fools) and venture capitalists with the occasional bootstrapper thrown in. I don’t see junk bonds working for pre-revenue companies as bonds are predicated on the ability to pay interest as well repay the whole amount at maturity. But for startups that have moved from the seed stage to early or growth stage (e.g. at least $1 million in revenue), knowing the gross margins for software and SaaS companies are typically north of 70%, there should be opportunity for junk bonds (e.g. high interest loans) to finance growth. The bonds would be senior debt such that failure to repay or refinance the bonds would potentially turn ownership of the company over to the bond holders, there’s sufficient collateral in the form of company equity to back the financing.
Here are a few reasons why we don’t see a junk bond market for startups:
Reporting, auditing, and other controls for startups are typically weak giving little transparency to potential financiers
Many technology startups that reach $1 million in revenue already have investors and are on the investor train (e.g. once you raise institutional money, and things are going well, you’re going to likely raise more and more rounds of equity financing)
There are so few startups looking for this type of financing that connecting the buyers and sellers would be prohibitively expensive
We’re not going to see a junk bond market for startups anytime soon but I believe there’s a need in the market for profitable, fast-growing startups to be able raise debt financing without collateral (e.g. real estate or physical assets) backing it up.
What do you think? Is there a market for startups to do debt financing with asset-lite businesses?
Several times now I’ve said that a great corporate culture is the only sustainable competitive advantage. How do you define a great corporate culture? Here’s how we define and measure our culture to determine if we are doing a good job:
We measure ourselves against the core foundation of good work, good people, and good pay:
Good work – fun, interesting, and challenging
Good people – positive, self-starting, and supportive
Good pay – well above average compensation with strong benefits
We have an anonymous quarterly survey sent to all employees asking if they agree or don’t agree that we meet the core foundation (last quarter we had 100% somewhat agree or agree and we typically have 92%+ agree) as well as asking the Ultimate Question (how likely are you to recommend this as a place to work to your friends)
We measure employee turnover and typically only have one or two employees leave per year
We require unanimous consent for any new hires (anyone in the hiring process can say ‘no’ and the candidate will not move to the next round)
Defining a great corporate culture is hard. We’ve set out our own standards and methodology and feel confident we have an awesome corporate culture.
Entrepreneurs are typically half-glass-full types of people and I’m no exception. I have much to be thankful for and Thanksgiving is a great time to reflect. One of the best parts of being an entrepreneur is that there are so many opportunities everywhere you look.
I’ve mentioned most of these before but it is important to give thanks as a company. Here are a few of the things we do to give thanks and celebrate our success:
Thanksgiving pot-luck lunch the day before Thanksgiving
Weekly catered lunches (free food Fridays)
Monthly heroes ($100 cash plus a cool lawn ornament for the month)
Quarterly celebrations (e.g. Braves game, bowling, Piedmont Park picnic, etc)
Quarterly community service projects to give back (e.g. Junior Achievement, clean a park, etc)
I think it’s important to give thanks and we’ve incorporated it into our corporate culture.
There is no recipe for success in startups. Every startup is different. There is a pattern for success I’ve seen many times: Build a great corporate culture with strong engineering and sales teams. Yes, all departments like marketing, services, support, operations, and finance are critically important. The reality is that engineering and sales are the most difficult to get right.
A product doesn’t have to be the best to win but it does have to be good. Engineering teams matter. As much as B2B tech entrepreneurs would like to have self-service products, people buy from other people. Sales teams matter.
The corporate culture is the over-arching fabric of a company and the only truly sustainable competitive advantage.
Build a great corporate culture with strong engineering and sales and you’ll be successful.
Several EO Accelerator participants (accelerants) have asked me this year about setting up a board of advisors. In addition, the board of advisors topic was brought up again a couple days ago in my post What Should I Write About? I view advisors, both formal and informal, as very important even though I’ve employed informal advisors much more than formal advisors. I’ve also been an advisor to several companies.
Here are my thoughts on a formal board of advisors for startups:
Advisors should fill gaps in expertise (e.g. sales, marketing, services, support, operations, engineering, finance, etc) and/or be able to make key introductions to customers, partners, and investors
Advisors should meet quarterly or bi-annually as a group over a nice dinner as well as individually at least once between meetings
Advisors getting to spend time with other high-quality advisors, in addition to the entrepreneur(s), is a big part of the advisors’ experience
Advisors should be asked to commit for one or two years, but not typically more as the needs of the startup change over time
Advisors should not be compensated with cash but rather with equity (e.g. .1% – 1% depending on what they bring to the table with the norm being closer to .25% of the startup) along with the opportunity to invest in each round
Advisors that are also investors are ideal as they have more skin in the game
My recommendation is to seriously consider advisors and know that it is like anything where the more you put into it the more you’ll get out of it.
What else? What other advice do you have regarding startups and a board of advisors?
David Cummings on Startups 