Likes & Launch

Want to build a habit? Commit to doing the work.  Want to get better at something? Show up everyday. This came up at dinner last night with a group of fellow Women in VC.  

That principle of building habits is not a secret. And most habits are not physically demanding, like flossing everyday or drinking water, but it’s so easy to avoid them, forget them or just ignore them. Building habits is more about changing your mental approach to them than anything else, and it’s harder than it looks. To show up everyday to something.

Building a habit gets easier when you have a clear end goal. Training everyday is more important when you’ve already committed to complete a marathon. The bigger goal matters, but it doesn’t always have a firm date. 

Jerry Seinfeld wrote jokes everyday, not in anticipation of one show, but to improve his whole career. It’s not that he had great jokes everyday to write down, it was the volume of jokes that helped him pick the bad jokes.

Ira Glass’s advice from “What nobody tells beginners.”

I’m not running a marathon or looking for a career in stand up comedy, but I am focused on being more articulate with my ideas. 

After a friend’s recommendation of The Artist’s Way, I decided to create a habit of morning pages to pursue that goal. The practice of writing every morning (okay sometimes in the afternoon) has built my habit for writing. I started in journals but then in July 2015 moved to the web using 750words.com at the recommendation of Rick Webb. I’ve now written 123,000+words even with a number of missed days. Most of it is just chatter, half baked ideas, and reflection, but by showing up everyday, I sometimes hit on something that I want to get more feedback on or share with others. That’s why I continue to publish on this blog, to give myself a place to share ideas. Thanks for reading! 

My daily writing stats from 750words.com.

Writing is not publishing, but as Fred and Albert taught me at USV, writing is a great way to get feedback on your ideas and create a space for conversation around it. Shifting my publishing mentality from “I need to provide good ideas” to “I want to get feedback on my ideas” furthered my interest in publishing here more. I look forward to hearing more feedback.

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This is part two of the VC Community Series. Check here for Part I. 

Quick background, I’m the General Manager at Union Square Ventures, where I run our 6+ year community, the USV Network. The VC Community function has increased in popularity, and is also a core part of many other organizations like Accelerators, Incubators and Professional Organizations. This series is focused on sharing best practices for starting, building and growing a community in these organizations.

Building the right community for your organization

The landscape of VC communities is varied, especially when you include accelerators, incubators and other groups that have similar dynamics of peer professionals learning together. Deciding the scope of how to serve your community is a key product decision. 

Specifically, what is the goal of your organization? What is your relationship with portfolio companies? And what is the timeline of those services? These are pieces of your community product that should be decided early on. 

To help get you started, here are a few examples of the different relationship expectations, timelines and goals for different types of organizations. You can use this framework, whether you’re a VC, accelerator, incubator, or a professional network.

Institutional VCs

• Goal: Help each company grow and evolve until a successful exit.
  
• Relationship: Involved from investment to exit (IPO, acquisition, shut down)
  
• Timeline: 2-10+ years
  
• Example organizations: USV, Spark Capital, Kleiner Perkins, Redpoint, etc.
  

Note: For Institutional VC firms, whether you invest early stage or in later stages, a company would join the core community right after the investment and stay through the exit of the company.

Incubator, Seed VC or Angel

• Goal: Help the company get to the next level of investment or profitability.
  
• Relationship: Involved from investment to next investment (or shut down)
  
• Timeline: 1-3+ years
  
• Example organizations: 500 Startups, Angellist Syndicates, Betaworks
  

Notes: An Incubator, Seed VC or Angel investor may structure their involvement or investment with a company so that they pull back once the company makes it to the next investment stage.

Accelerators

• Goal: Help companies build quickly and successfully present at Demo Day.
  
• Relationship: Acceptance into the accelerator to a month after Demo Day
  
• Timeline: 3-6 months
  
• Example organizations: Techstars & YC
  

Notes: An accelerator is designed to provide a high concentration of support in a short period of time. They will likely focus all community efforts in a few months with a small buffer after demo day.

Professional Network Groups

• Goal: Help individuals grow and network over time.
  
• Relationship: Ongoing with membership.
  
• Timeline: 1-10+ years
  
• Example organizations: Elevate Network, YPO & EO.
  

Notes: For professional network groups, the purpose is to learn and grow in your career. Typically members join a group and stay until they change careers or decide to leave the group. There is less of a firm “conclusion” date.

You may agree with these constraints for your organization, or decide to change the relationship to be shorter or longer to fit with your firm’s expertise. My advice would be to start small before committing to too many things. 

How will you define the scope of your network?

How long are your members “in network” or “part of the community”? This helps to figure out who you are serving and for how long.

Look closely at the start and end dates of the formal relationship commitment you’re making. In venture capital, the companies you invest in are part of a larger ecosystem of entrepreneurs, and beyond that, a part of the larger industry. Where do you draw the line in where your community starts and ends?

At USV, we speak with a lot of companies before we invest in them, I wasn’t sure if those companies should they be part of the community or not. Equally, we have companies that exit, are we going to continue to serve them as part of our community after they leave? These questions can be answered on a case-by-case but I found that prioritizing the core of my community, I knew how to better spend my time.

There is no right or wrong way to serve the community, the choice is unique to each firm. Here’s how a few examples of how different communities have defined the boundaries of their networks.

What defines your community?

Members only

At USV, we focus 95% of our resources on companies already part of the portfolio. We do continue to include ‘alumni’ companies in our community events, but we are more passive than active. We don’t focus the USV Network on including pre-investment companies. We engage with those companies as a firm, but we do not include them in the scope of the USV Network.

Potential and existing members

Founders Fund runs an annual event called F50. They invite portfolio companies and other curated guests from their community. Not everyone has to be a potential investment, but they actively engage and work with their pipeline in addition to their members.

Members and alumni

YC offers a platform to allow continued networking for their accelerator alumni. Their program is a few months long, but access to the network is on-going. They connect with potential companies through HackerNews but the majority of their community efforts are for those connected into YC.

Lifecycle

FFVC ensures they are connecting with entrepreneurs at every step of the lifecycle. They plan social events that include members of the general tech community, high potential investments, their investments and past investments. They engage a wide group of people to add benefit to their founders and the firm.  

Each organization will be different, so figure out where you are interested in focusing your efforts. There is value in all of these approaches, the only differences is how you allocate time and resources to support the breath and depth of how you define your community.

Organization Outline Recap:

You should now have a better understanding of your operating constraints. Create your community outline that answers these questions:

- The thesis and culture of your organization.

- The next steps your community members are trying to reach.

- The timeline you are defining to engage your community.

- The boundaries of community members you’re focusing your support.   

Now that you’ve defined the characteristics of your organization, we’ll use these in the next blog post to define and address the needs of your customers: the organizations you’re serving.

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This is part one of the VC Community Series. 

Since 2010 year, there has been an increased focus on how VCs can deliver more value to portfolio companies. Whether a firm is interested in developing more value-add to compete for deals against other firms or if it’s to provide resources to help ensure better outcomes of the existing portfolio, it doesn’t matter. There is a growing focus on expanding value.

One of the fastest growing signs of this is the rise of the VC Community role.

Traditionally, VC firms were comprised of investment roles and administrative roles only. Their responsibility was to find great businesses, write checks and, depending on the firm, join the board to help those companies grow to a successful exit. Partners and investors were expected to provide their expertise and advice to portfolio companies, but those services were limited by Partner time. Entrepreneurs were encouraged to tap into external networks to find peers, seek professional expertise, and to hire talent. Venture Capital firms were experts in writing checks and were evaluated on their ability to get deals done and provide strategic advice.

In 2010, USV planned to expand their team to better connect their existing portfolio companies. They created the first General Manager role at USV,

“It will be the job of the GM of the USV Network to build on our early work to create a useful and sustainable connection between the portfolio companies. Think of it as a community manager for the USV portfolio. The community is small, and private, but populated by people and companies who are having a big impact on the web.“

In June 2010, they hired Gary Chou, the first General Manager of the Union Square Ventures Network. A mouthful of a title, but it was one of the first internal early-stage VC roles that was focused on building community among portfolio companies.

Five years later, there are now 30+ VCs with a dedicated team member focused on community. Out of the top 50 ranked early stage VC firms, the majority have one or more people focused on community efforts. A number of angel groups, accelerators and incubators are increasing their focus on connecting their portfolio companies to each other.

USV Network Evolution

Today, I run the USV Network at Union Square Ventures.  I’ve been growing our community for over three years and my predecessor, Gary Chou built the role from the ground-up for three years prior to that.

Since building a community in VC is an emerging field, there is a lot of conversation about why this is important, who should create one, and how to get started. I’m often asked for advice on how we’ve built the USV Network, our community of portfolio companies.

Questions aren’t limited to VCs, I’ve also been approached by accelerators, incubators, professional organizations, and non-profits, looking to build a community among their members or portfolios. The goal of the role is to support a group of individual companies at scale, through education, connections and resources.

So whether you’re trying to figure out if you should build this role in your organization, where to get started or if you want to take community organization to the next level, this blog series will walk through the process of building from scratch.

Creating a VC Community thoughtfully

There is a definite benefit for companies and VCs alike who create this type of service and that it is increasingly becoming a point of competitive differentiation. The risk is that if the community is not created with intent, it can be detrimental to the firm (too much overhead) and to the company (overwhelmed or too dependent).  

The rapid growth of the VC Community role across firms is a strong signal of the importance, but comes with a few warnings. Quality support is important but too many communities can be a risk to the portfolio companies, the VC’s reputation, and the perspective of LPs.

If you’re going to create a new community, here are some guidelines to make sure you’re setup for success:

Should you start a community for your portfolio?

If you’re thinking about expanding your community role or building one from scratch, consider what your VC firm offers, understand what the culture is, figure out how that applies to your role.

The best place to start is to look at the unique characteristics of your firm in order to figure how to leverage those to create unique value add.

What should you evaluate first? 

Before anything else, state the thesis of your organization. Your company culture matters. What is your investment thesis? What do you believe to be true? Use those to apply them to your own network.

At USV, we believe in networks. 

Thesis 6/8/11: 

Thesis 12/14/2015:

We’ve applied our thesis, the belief in networks to empower bottom-up, emergent behavior, to the way we serve our network, hence the name USV Network.

What is the goal of your organization?

Every VC, accelerator, and incubator is different. To best serve the community, it’s important to understand both the scope of your services and the characteristics of the companies you serve.

First, define the scope of your services. If you are an accelerator, you may only work with companies for a short time. If you’re a VC, you may remain with a company for several years. Defining the relationship expectations of your organization to the community is the first set of constraints.

For USV, we work with our companies when we make an investment all the way through to an exit. Whether that exit is an IPO, an acquisition or a shut-down, we continue to work with those companies. We anticipate we’ll work with a company around 10 years, in a few cases, even longer.

Looking at our portfolio, here are some things we kept in mind when we were getting started:

• We can be long term with our thinking. We spend years with each company so we don’t have to deliver all of the value in a short period of time, we can deliver value through long term relationships.
  
• If we include all employees, we have a large number of network members. We have a number of individuals we can tap into, it’s not just limited to a small number of small teams.
  
• Experiments can be tested multiple times with the same groups of people, instead of starting with a fresh group each time. Iteration and feedback are easier when community members can see and weigh in on changes over time.
  
• We can build lasting relationships between companies.
  
• We have a range of companies which means there is a lot of ground to cover. We have investments from 2004 onward across various locations, industries and business models. There is not a one-size-fits-all model to support.
  
• We wanted to keep the community manager role to a single person to ensure we were building something lightweight and sustainable. Networks benefit from low centralized overhead, unlike top-down advisory services.
  

Solve problems in your community

Take a look at your community. Do you have things in common with ours or do you have the opposite scenario? 

Take some time to spell out the unique components of your organization. Understanding what works for you will be the key to getting started successfully.

In the next post in this series, I’ll provide next steps and examples of how VCs, accelerators, incubators and beyond are serving their communities. 

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It’s a great time to be an entrepreneur.

Hungry and foolish? You’ve got advantages like never before. 

Relationships used to be hard to establish, build over time and were location advantaged. The people you went to school with or the people you worked with were a huge part of your network. That was great for Harvard and a networked company like McKinsey, but you no longer need to join those ranks to gain access to the exact same people.

Now, it’s easier to connect to ANYBODY IN THE WORLD. I found out I was one degree away from one of the Powerball winners in TN, we’re all so close, even when we’re far. The internet connected the globe, and the social web has brought each individual online. It’s more noisy but for most developed nations, we’ve all joined the web and we aren’t leaving.

Fortunately, entrepreneurs noticed the increased noise from so many people now being present in social networks. They’ve created tools that have given us all greater capacity for relationships than ever before. According to Dunbar, the human brain maxes out at 250 human relationships. Tools like Facebook, LinkedIn and Gmail Contacts allow storage over 1000 and give us just enough information over time to feel connected to thousands of people we’ve met. How many people do you feel are part of your family, personal and professional network? Most likely more than Dunbar imagined.

Financial Capital used to operate under old rules. Only a few people had excessive capital and only a few beyond that could get access to it. Money was granted under strict rules from a small group of people, banks awarded loans and lines of credit but usually only with substantial assets or strict rules based on federal credit scores.

Now it is possible to raise money from a number of sources for very niche reasons. If you want people to fund you based on your future earnings, check out GoFundMe or Upstart. If you are looking for personal loans with smaller fees than what Mastercard or Visa offers you, you can seek loans through Lending Club or Prosper. If you’re interested in small business loans or capital to fund your business, you can check out Funding Circle, CircleUp, Angellist or Gust. If you have a working business and just need capital before you’ll get paid, there is C2FO for that too. If you have a product or idea, you can crowdfund from friends or strangers via Kickstarter. Interested in raising money for a real estate project instead, yes you can find funding for that too. Personal loans, small business loans, projects or property, you can raise money through many platforms today, no bank or credit score required.

Financial capital is still not free, but there are lots of financial tools to find the funding that helps get your future off the ground.

Education is in abundance. Anything you want to learn, anything at all, you can do so today with an internet connection. Rewire your home or learn Chinese, learn to make a film or how to build a website. Education used to be limited, restricted to those who could show up, and very expensive. Today, everything is available to learn online for free.

If you find something that is not currently being taught online for free, you my friend have found a business opportunity! For the most part, it’s all free. Most new education companies charge for content even though it could be found elsewhere at no cost, the difference is that they are selling the better learning experience. A more curated path to education is nice, but isn’t necessary so if you want to learn it, get to it.

Customers are everywhere. There are more people participating online than ever before, that means more than yesterday, the year before or a decade before. Google made a big business on a much smaller number of customers. The good news for google, more people online means more fragmentation. People are finding new places to spend their time. So there are more of them to find but the efforts to find them aren’t as easy.

Mobile to the web, there are participants online and they are ready to engage. As an entrepreneur, you don’t have to worry about the size of your audience, instead you have to look at the cost to acquire their attention. Attention grows with new people online, but don’t think every other online competitor doesn’t see it. The companies that figure out how to provide value to customers that are easy to find will have an advantage.

Experienced talent grown from the new incumbents. Apple, Google, and Facebook are the new tech incumbents. Players like Microsoft, Yahoo, IBM and Cisco still have a big place in the market but they are overshadowed by the new big three. The move to mobile has shaken out for now with Apple and Google in the lead with rights over most mobile phones in the developed world. Those platforms are stable and a great place to build a career if you’re an engineer.

Five years ago you couldn’t find an iOS developer with more than 5 years experience. Those platforms have evolved but aged nicely to allow great talent to become experts. The first iOS developers at Facebook have already vested and are in the market, and may be ready for their third new role now. Small and big companies can attract experienced talent. Stabilization in those platforms over time means that everyone wins in having a big pool to pull from.

No longer are engineers learning on your dime, they likely come from somewhere that could afford that type of risk. They now have experience and an interest in working for you, even if that means cut wages and longer hours. You’re in a good spot to continue to invest in great engineering talent, it may even get less expensive as the talent pool grows.

It’s a good time to be an entrepreneur. It’s a great time to the part of the tech ecosystem. Build the relationships that will earn you the new role that you want. You have access to all of the education that you need. Seek out experienced mentors and pursue the path that leads you to the customers you want to serve. A mature ecosystem will continue to evolve, but there is more room for you to be there to shape it.

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In 2015 the USV Network hosted 50+ meetup events and social gatherings. Since our portfolio is distributed across 20 cities in 6 countries, we often try to center NYC or SF centric events around other larger conferences, so anyone outside of those cities could pair their trip with another event.

As we plan 2016, we’ve crowdsourced the top conferences and events that our portfolio is planning to attend. Check out the calendar if you’re looking for great events, want to plan your own event without conflicting with others, or if you’re just planning trips to SF and want to avoid Oracle or Salesforce conferences hotel-pricing.

One last note, our portfolio shares interests beyond just traditional “tech”, so you’ll see a mix of things from maker events to money conferences, music to film. This list is not comprehensive so if there is anything not included here, please add it in the comments or ping me on twitter, @br_ttany. 

JANUARY

6-9: [Las Vegas] CES

17-19: [Munich] DLD

21-31: [Park City] Sundance Film Festival

FEBRUARY 

22-25: [Barcelona] Mobile World Congress

MARCH

1-6: [Valencia] Internet Freedom Festival

11-15: [Austin] SXSW

30: [SF] RightsCon Silicon Valley

APRIL

12: [NY] Dev:Network CTO Talks

14: [NY] WE Festival

26-28: [New Orleans] Collision Conference

MAY

3-4: [NY] DLD NYC

9-11: [NY] TechCrunch Disrupt

20-22: [SF] Makerfaire SF

24-26: [SF] Twilio’s Signal Conference

TBD (28th?): [SF] Google I/O 

JUNE

TBD (6-8th?) [SF] WWDC 

21-22: [Madrid] Money Conference

28-29: [NY] MongoDB World

JULY

<conference free zone>

AUGUST

<conference free zone>

SEPTEMBER

12-14: [SF] TechCrunch Disrupt

18-22: [SF] Oracle Open World* (aka, don’t book a trip to SF)

OCTOBER

4-7: [SF] Dreamforce* (avoid downtown SF)

NOVEMBER

1-2: [NY] Makerfaire NY

7-10: [Lisbon] Web Summit

30 - 1: [Helsinki] Slush Conference

DECEMBER

<conference free zone>

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Chicago is not New York Tech.

I moved there in 2011 after we took funding from Lightbank. I was leaving behind friends, a great apartment and a bustling tech community in NYC. It was tough at first but most of my time was quickly consumed with building our business. My day consisted mostly of waking up, going to work, eating three meals there, working out and heading home. Not much of a social life to say the least. 

I did go to a few Meetups and events to meet others in the Chicago tech community and to think about something other than gtrot. I met a few core friends in tech, much like the circle I knew in NYC, and we tried our best to get together more than once a month. It was working, but it still felt like the community was missing a space to share all of the amazing things being built in Chicago. 

I remember telling a few people that the NY Tech Meetup in NYC was a great way to showcase companies and meet up regularly with friends in the community. I couldn’t find it in Chicago but I kept encouraging others, those with more free time, to consider starting such a meet up in Chicago. 

I asked, I encouraged, and I waited. 

Nothing. No one was interested in starting a Meetup, they didn’t see how it was different. I wasn’t able to convince them. 

Still wanting a community to be part of, with meetups every month, I decided to start it myself. It was something I wanted to exist so I decided to try it out. 

A few emails and a few favors from people I knew in the community, we hosted our first event at NAVTEQ in Chicago. Just like NYTECH Meetup, we charged $10 to ensure attendance. We hoped for 50 people, we had 120 show up. Event one was profitable. There were company demos, pizza and beer and plenty to time to network at the end. 

Here were two photos from the first event: 

Startup Stella demoing FeeFighters. 

Seth sharing lessons learned from his media company, Technori. 

I was excited to see so many people connecting and to be able to be a part of the community I was seeking. 

People started to ask about the next one. Could they demo? Would there be a bigger space? When could they get tickets? 

I was willing to get the Meetup off the ground, but I was weary of adding more work to an already full plate. I wanted it to exist, but I didn’t necessarily want to run it. 

A second event was scheduled, but before the next one, I had offers to combine forces or find a new home for the growing community. My proof of concept was a success and others took notice. 

I got an offer from Technori, and happily sold the *profitable* business. It was a win for the community, to have professionals taking over and a win for me , because now I could be part of the community I wanted, without working on the logistics. 

Chicago Tech Meetup went on to become a key part of Technori. They took it from a group of a few hundred to 21,000+. Their events quickly started selling out spaces with room for 400+. It went from a small idea to a huge anchor in Chicago. I’m so excited that it’s thrived so well and grown far beyond what we ever expected.

Tonight marks Technori’s 50th Meetup. If you live in Chicago or know someone who does, I’d encourage you to share this invitation. It’s going to be a great event, including a keynote from Kickstarter’s own Charles Adler. 

I’m a firm believer in the power of connecting people to solve problems. Whether in person or online, I’ve always found that you can strengthen a community or a city by giving people places to connect. I’m thrilled to see that Technori is doing that in Chicago, and now expanding to other great entrepreneurial cities. 

Congratulations to Technori! Cheers to the next 50! 

Bethany & Jon welcome a full house to the Beyond Coding Classroom.

Last night I sat in on one of the Beyond Coding’s classes hosted at Stack Exchange. An innovative new program to help bridge the knowledge gap between learning to program and finding a job as a programmer. The best part of the event was getting to witness the evolution from idea to execution. 

A few months ago I learned about the program from Bethany, Marketing Manger of Stack Overflow Careers at Stack Exchange. Bethany was thinking about how to put action against many issues she cared about. She’s been an active voice at Stack and in the USV Portfolio on creating diverse and inclusive work environments. She’s professionally and personally passionate about helping people find a rewarding career in programming. On top of that, she’s a proud New Yorker who recognized that investing in the ecosystem early is the best way to support the future of a Tech community here in NYC. 

Bethany had a vision and she’s made it happen. She’s been hard at work with countless others to get this program off the ground for this summer. 

Today, Beyond Coding sets out to equip emerging computer programmers in New York City with professional skills needed to help them succeed in their first job working with code. The program launched June 11th, as a direct response to the City’s Tech Talent Pipeline efforts to grow NYC’s local tech ecosystem. Beyond Coding is free to participants due to the support of a joint partnership among six companies in New York City’s startup ecosystem: Crest CC, Foursquare, Kickstarter, Tumblr, Trello, and Stack Overflow. Full disclosure, you’ll recognize 4 out of the 6 are part of the USV Portfolio. 

As you see in the photo above, there was no shortage of interest. The program received so many applications that they needed to split the attendees into two cohorts. The curriculum is the same for each class but the split was mostly decided by their current education path. The program last night was filled with college students and recent graduates, most between the ages of 20 to 25. The second cohort is composed of students switching careers, who hover between the ages of 30 to 45. Students in both cohorts represent all neighborhoods, ethnicities, genders and beyond. Everyone is there to do the work, learn from others and collaborate. 

The courses focus on learning the necessary skills to land a job in the next 6-18 months. Everything from learning about data and it’s importance in any tech job, to building a github and Linkedin profile to be visible in the talent market. Some of these steps may seem like a no-brainer to those already in the industry, but when you’re an outsider with few peers working in the industry, it’s all new. This environment of interactive learning, collaboration, turning in homework assignments on time, and providing feedback to peers is a learning experience too. Each component adds to making these talented developers workforce ready. 

Last night’s course focused on learning how to learn. A lot of software engineering jobs aren’t just looking at the skills you have, they are looking for your ability to acquire new skills. Jon did a great job helping students discover their own motivations, learning styles and passions through an engaging lecture that included group participation, sharing with peers, videos and stories of his career in tech. The three hour course had everyone participating and collaborating in a way that few classrooms do. 

Individuals working on their own assessments before they share with their peers. 

Participants recording their stories, motivations and learning styles. 

I was impressed with the course, but even more so by the students. I took part in a peer discussion with two engineers entering their senior year of a computer science degree. A young woman and man who both realized the way they got interested in computer programming was through video game cheats and making edits to their Xanga blogs. They didn’t know it was programming, it was just looking up how to write commands to make the site or game do what they wanted. They both grew up with computers as far back as they could remember. That sentiment surprised me as I reflected on my own experiences. I had learned how to hack to get my video games to work but my family didn’t have a family PC until at least 3rd grade. What a difference a decade makes in access. It will be great to see the impact these early start engineers has on the future of the web, the problems solved by software, and the potential for fun. 

I’d bet on everyone in that room. If you’re a startup hiring for great entry level engineering talent, you can too. Sign up to participate in the hiring fair at the end of the summer on their website. 

To learn more about the program, check out the Beyond Coding website: https://www.beyondcoding.io/

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I’ve been thinking about information on salaries ever since Gary, Christina, and Leland’s SVA Class on Entrepreneurial Design. On that Saturday, I met with Rachel, a designer and student who was building a project around the Wage Gap. She wanted to help empower employees, especially designers, to get fairly compensated. 

The current wage gap has two sides to it, the companies providing the compensation and the individuals asking for the compensation. Some companies have a compensation range and then rely on employee negotiations to set salaries. Other companies, which now includes Reddit, decide on the compensation and do not take negotiation from the employee into consideration. 

Given these two scenarios, the wage gap still exists because employees aren’t negotiating to their potential salary or companies are not determining pay fairly. 

As an individual, it’s hard to know where you net out. Should you try to negotiate for more money? What is the fair market value of your time? If you are returning to the workforce from school or home, what should your salary expectation be? There are a lot of questions but not a ton of great resources to get clear answers on the topic. 

Thankfully, Rachel has taken this on as her mission for Let’s Talk About Pay. She’s created a resource dedicated to opening up the compensation questions in order to create more transparency and confidence for those entering the workforce. If this is a topic you care about, I’d encourage you to participate: 

• Take a quick survey for Rachel’s project. 
  
• Contribute your stories or experiences to the conversation.

I admire Rachel’s work and look forward to seeing the discussion continue. Fair wage is important and should be a conversation with more transparency.

Something to share?

I want to hear from you! If you have something to add or challenge, please share in the comments below or on Twitter.

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A great developer I know started building an app and now has more traction than he expected. He’s trying to figure out how to sustain the development by expanding his team. Cash strapped to pay salaries, he’s considering raising money to continue expansion of the app. 

We’ve been going back and forth on how to navigate terms for an early stage fundraise so I thought I’d share some of those ideas here. 

Equation to calculate valuation:
1) How much of the business are you willing to give up? Typically 10-20% in a seed round, but can be less if you need less money.
2) How much money do you need to get you through the next 12-18 months? or to prove the next big milestone so you can fundraise for your next round. You may be able to get profitable off of one fundraise, but if not, think ahead for how much money you need to buy you the time you need to prove progress.
3) Valuation is this equation : Valuation = money you need /% you’re willing to give up.
If it’s $75k / 12% = $625,000 valuation, $700,000 post money

If it’s 100k / 10% = $1M valuation, 1.1M post money.

Determining if it’s a fair valuation:

1) Valuations are usually based on the future value of the company after you take this money. So the company may not be worth $700,000 today but with $75k of capital, you’ll be able to get it to that value.

2) How do you determine the value if you don’t have revenue to base the ‘worth’ off of? This is the tricky part. Danny Crichton provides a deep analysis in his “Complete Quantitative Guide To Judging Your Startup” (thanks to Stash for sharing) but even with lots of data, it’s still up to the investor. Serial investors or institutions should have a rough benchmark of traction, potential and growth that they can make an offer on valuation. 

Don’t forget the big picture
From my VC & entrepreneurship experience, early stage valuations are more of an art than a science. A few things to remember when doing the fundraising dance: 

- You can always raise less money. For example, if you only need $50k to get to your next milestone, take the $50k in January and use that money to build the business. By August you may have great traction, revenue or engagement metrics that place a higher valuation on the company. You may decide to raise $250 - $1M at that point. 

If you raised more money earlier, you may have sold equity at a higher cost than you needed to. In this example, if the valuation on your company was $500k in January, if you raised $50k you’d be selling 10% of equity. If you tried to raise $250k in January, you’d be selling 50% of your equity, not a good idea.  

- You might not need venture capital now. There are ways to bootstrap, find alternative sources of capital and further prove your idea today. Mark Suster does a great job covering this point here. Many alternatives cost zero equity.

- Think about your future rounds. Fundraising isn’t just about the capital you raise today, it’s potentially a piece of a longer path. The valuation, capital and time that you negotiate for now will impact your next fundraise. If your valuation is too high now, it’ll be more difficult to negotiate a higher valuation down the road. If your burn is too high for the amount you raise, you may not have enough time to grow the business. The early investors you work with may not be willing or able to invest in future rounds. This will impact your strategy for your next raise.

- Keep your cap table clean. If you have a messy foundation, it gets harder with each round to clean it up. Make sure equity is properly allocated, accounted for and setup with vesting schedules to keep team members and advisors properly engaged. Equity may seem cheap early on, but it feels much more expensive once you start selling it to investors. I’ve made this mistake in the past and it’s an expensive one to learn. 

- Valuation is set by the person writing the check. You may want a certain price, but it’s only possible if the market is willing to pay it. This is a negotiation, so figure out what the market wants. There are tradeoffs between “easy money” and “smart money” so don’t forget to evaluate what you’re getting in return from the investors. 

For answers to many frequently asked questions, Mark Suster has shared a Raising Venture Capital guide here. 

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This post is the third in our “Lessons from the USV Diversity Summit” series. In December, USV hosted our first Diversity Summit. Below are some of the most helpful insights we gathered about how to take action.

If you’re just joining the conversation, you can find previous posts Part I: “Lessons from the diversity summit” here and Part II: “How to start talking to your team about diversity” here.

Take inventory

If you want your company to embrace diversity, the first step is transforming your corporate culture. Your first step is assessing what the current culture is like.

What exactly does culture mean? People sometimes use the word “culture” to refer to company perks like game rooms, free lunches, or vacation days. And while those benefits certainly have an effect on teams, they aren’t themselves culture. Culture is about how your team communicates.

At its core, your company’s culture requires three things: its mission, its vision, and its values. What problem does your company solve? How does it solve it? And upon what values do you base the decisions you make?

The mission, vision, and values are unique to each company, and each will no doubt be rewritten, revised, and revisited many times over the lifetime of the business, all the while shaping and influencing the culture of the company.

So to make sure that your corporate culture is welcoming toward diversity, you need to revisit your mission, vision, and values to assess how you’re communicating them to the people you employ, serve, and represent.

Beware of inadvertently sending messages that conflict with your values

Start by conducting an “external culture audit” to get a picture of how your company presents itself to the outside world. Imagine you’re a consultant and you’ve been asked to evaluate the company’s corporate culture from an outsider’s point of view. First, visit your company’s website and consider what messages are being sent by your landing page, job postings, careers page, and social media accounts.

• What words does your company use to describe itself?
• What visuals are provided—photos, logos, or graphics?
• If there are photos, how would you describe the people shown? The environment?
• Imagine you’re a world-class candidate for an engineer/sales/marketing/HR job landing on your company’s website. What would you find appealing and what would be off-putting?
• Consider how different types of people would respond to the messaging on your site. What if you don’t drink? What if you’re a parent? What if you only want to work with the best talent? Are there things on the site that would make you feel uncomfortable or unsure about whether this is the place for you? If so, ask yourself this question: Is your company intentionally trying to filter out certain kinds of candidates, or is it accidental?

Now, the most important step: Are there conflicts or inconsistencies between your company’s stated mission and the way it comes across online? Does your company’s Twitter feed accurately reflect the mission, vision, and values of the company, or is it filled with off-color jokes? Does your company’s digital presence successfully reflect the values you want to celebrate?

A lot of well-intentioned companies inadvertently deter the most diverse candidates not because they don’t care about diversity, but because they fail to control the subtle messages being sent by their public-facing materials. Last year, for example, I did an external culture audit for one of our portfolio companies. I found a lot of conflicts between how the company viewed itself and how it was presenting itself to the outside world. Conflicts will inevitably creep in, so be vigilant and make sure to get feedback to ensure the company’s voice aligns with its values.

Values-Messaging Conflict: The Case of RunKeeper

In a comment on a previous diversity posts, Emil pointed out that RunKeeper, a company that makes an awesome fitness app, may be sending mixed messages to its users. RunKeeper is not a USV portfolio company, but I’m a big fan of their product and I’ve heard only good things about their team. Let’s take a look at their website, one page at a time, and consider where there may be an unintended conflict in their messaging.

As you can see above, RunKeeper clearly states its core values, addressing the issue of inclusiveness directly.

(link: UX Job Description)

I love these candid job descriptions. It’s easy to get a sense of the fun, lighthearted tone of the company. There are some inconsistencies, however. The job post doesn’t list the core values, but there are some hints about what it takes to fit in. So the question is this: If you’re not into The X-Files and arguing about beer, can you still work there? Would you think twice about applying? What if you’re not into TV, but you’re a fantastic UX Designer? Would you still apply?

There’s no doubt that teams within companies have their own idiosyncratic ways of getting along with each other, and I have no doubt that the above description really does capture the kinds of personalities that make up the UX team at RunKeeper. And it makes sense that they’d look for someone with a similar personality who’d fit in easily.

But the problem with a job listing that describes what the people on the team are like—and subtly demands that anyone applying fit that same mold—is that it creates a bias against people from different backgrounds, excluding people who don’t fit the profile of the existing team. The message is, “This is what our team is like, and we want to hire someone just like us.” But if you want to increase diversity, that’s not the message you want to be sending. What you should be saying is, “We’re an inclusive environment looking for top talent, and we want to welcome you to our team no matter what your background is.”

How to align your messaging with your values

The good news is that there are straightforward ways to communicate your company culture by speaking about the things you value, not just the things you do.

Take Simulmedia, an advertising technology company. Simulmedia has been thoughtful about making sure the job descriptions on its website include the company’s mission, vision, values, and culture. The same language is used consistently on every job description. (Yes, they’re hiring).

The thoughtfulness of the language in these descriptions subtly reinforces the idea that Simulmedia values hard work and play, but it’s through multiple mediums and the emphasis is on team or individual perks: “While we work ‘startup hard’ we also believe in letting loose via Happy Hours, team activities, and an unlimited vacation policy.”

So write a list of the values you want to convey in your own company’s job listings. Check out how other companies communicate their culture.

Another great example is SoundCloud. They recently published a new jobs page. They discussed the project at the Diversity Summit and I think they successfully delivered a more inclusive and very SoundCloud experience. The took the extra step to use their platform to talk about the company culture by share audio recordings from employees.

The internal culture audit

After the external culture audit comes the internal culture audit, which can be more challenging. Running a business means communicating all day long, which often means that speed gets prioritized over thoughtfulness.

To conduct the internal audit, keep your company’s mission, vision, and values in mind as you consider these questions:

• How is good news communicated at your company?
• How is bad news communicated?
• How is feedback given or collected?
• What happens if an employee violates a core value when they’re in a meeting with colleagues? With a customer?
• How do you describe your company culture to friends?
• How do you describe your company to people you’re trying to recruit?

Do your answers align with your mission, vision, and values, or do they conflict?

Ask your colleagues the same questions. Are their answers the same as yours or different? Where are there conflicts, are they coming from a subset of employees who are dissatisfied? Are they the same or different? Explore the disconnect and see if the company culture is evenly distributed.

Right fit your mission, vision, and values

The purpose of the internal and external culture audits is to understand what the company truly is and believes. The audits will signal whether the company is acting in alignment with it’s values.

If you want to make your company more diverse, you need to say so explicitly in your official statement of values. The only way things will change is if you’re new values are actually recognized. If not, it’s time to revise the way business is done.

Most mission, vision, and values come from senior leadership, so it’s important to include top managers in your list of findings and recommendations. Keep the team small for the first version, opening up the process to feedback from the wider team in time.

Your company’s mission shouldn’t change very often, but its description can fluctuate, especially given how fast companies today grow and change. During my time at USV, I’ve always been able to get a read on the health of an organization by asking various employees to explain what the company does. If their answers vary widely—like if one employee says, “We’re a Facebook app that books flights” while another says, “We improve travel with social recommendations”—there’s a disconnect. It’s a signal that communication of the mission is getting muddy.

Inclusion is a practice, not a statement

Values may need closer inspection too. Is the behavior of your employees consistent with your company’s core values? Almost every company has a stated value that captures the importance of diversity. The problem with diversity is not with the values companies have, but with the execution. Inclusion is a practice, not a statement.

Although not in the USV portfolio, BufferApp came up as a great example of a company living its values. Buffer values “defaulting to transparency,” which they embody by publishing a full transparency report that includes real-time revenues, salaries, and equity. The value they place on transparency is demonstrated with visible behavior.

Our summit attendees celebrated Buffer, but most were not in a hurry to implement this kind of transparency at their own companies. Values are important, but can overlap at the edges. The best way to navigate values that seem at odds is to provide more context or multiple values. AMEE balances the trade-offs between transparency and privacy, values that can seem at odds, in their principles and values: “We have 5 main values that guide our decisions: Open, Honest, Transparent, Simple, and Respectful of Individual Privacy.”

Companies need to live the mission, vision, and values they set forth. If they don’t, they should change either the values or the corporate culture so they align. Diversity initiatives need to be part of the company’s values. Revising the company’s values statement is only useful if the company lives in accordance with them.

Putting values into practice

Once the vision is laid out, it’s time to put it into practice. Small changes add up to make a difference. Companies in our portfolio have had success printing posters with the company’s values and hanging them in every conference room. The posters get referenced during difficult discussions, helping ground the conversation in what the company values and not just what one individual believes.

A company’s mission, vision, and values should also be posted on its website, included when onboarding new employees, shared at the beginning of town hall meetings, and compared against employee 360s performance reviews. Consistency is best complemented with feedback loops. Whether it’s surveys or informal asks, find ways to get feedback from customers, clients, and candidates on how you’re performing against your values. Values are a tool to help set a standard across the organization of what’s expected, celebrated, and prioritized. They have the biggest impact when they are part of the everyday communication of the company.

Distributed diversity initiatives

Once you’ve made sure your mission, vision and values are in alignment, it’s time to start implementing diversity initiatives. In our summit, the most often-mentioned way to start is to create three small working groups to tackle different issues and set a budget.

The working groups should focus on increasing diversity in three areas: internal, external, and recruiting. The most common reaction is to push all implementation to HR. Don’t do this. Do not make diversity only an HR issue.

Return Path, an email deliverability company, found success breaking diversity initiatives into three internal working groups: Retention, Recruitment, and Communication. They saw even more progress when people from cross-functional teams participated.

Tumblr took a similar approach. Instead of making diversity an initiative siloed within HR, they have cross-functional working groups. There are members of the HR team, but the team is not limited to it.

The same construct works for larger companies too. Morgan Stanley, for instance, has one diversity and inclusion council, but three sub-committees:

1. Recruiting/pipeline
2. Internal employees
3. External relationships

These sub-groups work best when they have a clear mission, support from senior leadership, and a dedicated budget to get things done. The council as a whole has a budget allocated to it, and the funds are split among the three sub-committees. Having a straightforward structure makes it easier for employees to pick up a project and run with it based on which sub-group they support.

Many startups are wary of setting a budget for diversity sub-committees. I asked Lisa Lee, Pandora’s Diversity Manager, how she suggests how highly cash-conscious startups should allocate funds. She advocates having a budget, “It’s important to do diversity work. You don’t need a massive budget. There are so many ways it can still be done. ” So whether it’s the cost of a team lunch or a team offsite, remember that making a financial commitment to get things done is a way to invest in change. Look for ways to put that money to work.  We’ll cover those in the last two posts in this series.

Consistency and iteration

Diversity is never done. Adding it into the company culture requires time and constant evolution. But the earlier you start, the easier it will be to grow with your company.

Whether you’re an early-stage startup or a larger company, take inventory of your culture, build diversity into your values, organize teams to implement initiatives, and hold people accountable.

In our next post, we’ll explore more ideas on how to integrate diversity into your recruiting and onboarding processes.

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As one who can relate to falling into VC industry this post rings true. But think ‘network’ is impt enough to deserve own mention!‘Tis the season to hear from a number of ambitious undergraduate and grad students about job opportunities. I’ve gotten a lot of questions about finding a VC job, so I thought I’d share my thoughts here.

Here’s my story about getting into VC which wasn’t a straight line or an intentional job search. I’ve found that the story of ‘falling into VC’ is quite common so depending on the role you’re searching for, analyst, associate or a platform/community role, you may have different odds of finding a clear job posting.

Here are my thoughts on landing a job in VC: 

1) Roles don’t come up frequently in VC. The best way to find out about them is to talk to many VC firms. At USV, we aren’t looking to add to our team unless someone leaves. (The analyst roles at USV are on 2 year rotations so those won’t open until summer of next year.)

2) Get technical. Having technical experience helps in the role and on analysis of other technology businesses. Whether you use Codecademy or an in person class, having this skill set is becoming a requirement for many VC jobs. I’d recommend building a small web app in Ruby or Python. You should be able to pick this up learning part time over 3 months. Even if you never write any code in your VC job, understanding the fundamentals of CS and development are a big plus. 

3) Have a public opinion. Having a presence on the web is a great way to show your enthusiasm for tech and share your opinions. VCs anticipate getting it wrong at least 30% of the time, so don’t worry that you’ll get it right, just get your ideas out. Twitter is a great place to jump into conversations with other VCs. USV.com is an open place to share ideas too.

Blogs on Tumblr or Medium are a great way to pressure test your ideas. When you do interview for a role in VC, you’ll be able to point back to your thoughts over a long period of time, which is difficult to communicate in a 60 minute interview. Showing how you think will also be part of the application, that helps the firm understand whether you see the world the same way.

4) Jobs outside of VC that are like VC. There are more accelerators and incubators in every market world-wide. Roles at these organizations have a similar approach: find the best companies, work to help them grow and scale, apply a thesis to making investments (time, money or both) and build relationships with the tech ecosystem. It can be a great place to start or stay depending on which aspect of VC you’re most excited about. 

5) Know the unique value that you bring to the table. I’m biased towards operators because I was an operator. There are people who get into VC who never work at a startup. Operational experience is not a requirement. When the question about what you bring to the table in terms of evaluating new companies or helping them grow, it helps if you have a skill set that can be put to work. 

Expertise in an industry can be helpful, like working in medical research and then going to a fund that invests in that industry. If you’ve spent time in a particular area in your free time, like Joel at USV who’s become a thought leader in bitcoin after many hours hacking on, researching, and talking with the industry leaders. If you have operational experience in a growing field it would be valuable too, like Jonathan at USV who worked as a Product Manager at a mobile company, he understands many challenges on mobile that help guide our thesis there and support our mobile companies. 

6) Network. The people you meet will have a big impact on what you bring to the table. From entrepreneurs to exchanges in the comments on blogs. Interacting with people is a huge part of the job so get out there or get online. Thanks to Justin Hall for the reminder.

Caveat on this advice, it’s based on my experience at USV. Other firms may have a different perspective, and even those may change as the industry continues to evolve. Don’t forget, with AngelList and Gust, accredited investors can setup their own syndicates even easier than ever before. If you can’t find the job, you may be able to make one. 

Something to share?

I want to hear from you! I’d curious to hear your thoughts in the comments below or on Twitter if you’ve heard other advice.

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We advise all of our portfolio CEOs to hire a management coach. Working to improve leadership skills is vital for management and shouldn’t stop at the CEO. Jerry Colonna, Fred’s Partner from Flatiron Ventures, is a highly regarded leadership coach who works with a number of the top CEOs in tech. Most, if not all, publicly traded company CEOs have a coach, even Jeff Bezos as mentioned in The Everything Store. 

Every executive, no matter how much experience, will always have room for improvement. Especially when they’re leading a fast growing venture-backed startup, where the obstacles are constantly changing.

It can be lonely at the top of the company. Even if you have a great executive team and board, there are still concerns you may not feel comfortable sharing with those members of your team. As Fred and Mark discussed, board members can serve as a coach but the relationship is loaded because they have other chips in the game. Having a neutral third party to discuss decisions, challenges, and personal development areas is essential. Whether it is on a weekly or monthly basis, hiring a coach is a business expense that will empower a CEO to make the leadership decisions that drive the company forward.

The stress of entrepreneurship doesn’t stop at your doorstep. Professional challenges can seep into your personal life. To do your best work, you have to take care of yourself. Finding the time to care for your emotional and physical well being is essential. Running, yoga, biking, walking, spending time with family – whatever the outlet may be, being disciplined to care for your own well being is critical. Even at the fastest growing company, if you’re not taking the time to recharge, you won’t be leading a company well for long.

Although few may talk about their coaches, I think it’s an advantageous choice for any CEO. 

If you’re looking to find a coach or have someone to recommend, drop a note in the comments. 

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I was talking to an entrepreneur this week about fundraising plans for her business. I tried to encourage her, but also set expectations about building in a category that comes with a lot of investor baggage. I know because it’s one I built a business in too: travel. 

The travel industry has all of the makings of a great market. The last major innovation in flight planning planning is 10 years old when OTAs were fighting for eyeballs using tv commercials and SEO. Kayak was a huge success for organizing all of the information transparently in one place, but since being acquired in 2013, not much has changed. Even the mass adoption of mobile phones has had little impact in shaking up the incumbents. 

In 2012, the travel market was sized at $313 billion and has only grown with the addition of millions of new consumers online. There is a lot of potential in the market, so why aren’t more businesses being funded here? 

Trips, far off destinations and photos on beaches makes travel a fun industry to talk about. The product is something people like thinking about, vs say audit software, but it’s hard to grow a mass customer base. The challenges start with high costs for search, infrequency of purchase, large incumbents spending a lot on marketing, gaining customer mindshare, and division of business v. personal travel. It’s a hard industry to crack as scale, which has left many investors burned by investments in this space. 

Even trip-planning companies that have been successful in fundraising, haven’t had break-out growth. Hipmunk emerged as a contender to the traditional OTAs, but hasn’t found it’s breakaway growth even with $40M in investment. Gogobot raised $39M in funding but pales in comparison to TripAdvisor. 

Hipmunk vs. Kayak’s Alexa Ranking:

Gogobot vs. TripAdvisor’s Alexa Ranking: 

Growth for both of these companies is good, but it’s not likely enough to push those companies to a big exit for investors. The early and late money in those companies are still waiting for growth to set them up for an IPO or a large figure acquisition. 

Investors who’ve done travel deals in the past or are currently in one of these companies are likely more skeptical of the category than anyone. 

Yes, the consumer experience for planning a trip is still broken. Yes, there are ways to use data and UI improvements to fix these problems. Yes, there are opportunities in mobile. But no, no I’m not investing in travel. Even the smaller travel companies who have exited, they aren’t the 3x+ investors are looking for. The market is still out on what these companies are worth. 

So what will change investors minds? A good comp in the market helps. Yes, there are photo sharing apps that still get funded, largely because Instagram’s exit at $1B is a good comp. If you’re an investor who places a few small bets and one of them even has the potential to be worth $1B, that sounds like an attractive deal. Is that rational, no. Is that the way to make smart investments, likely not, but the facts add up. There is a market (and an exit strategy) for photo sharing apps. 

Travel doesn’t have that luxury, or at least not yet. 

The big company that may change people’s minds is AirBnB. Now AirBnB fits in the travel category of accommodations, but it’s business model is far from the average travel planning site. Instead of being a superior way to route customers to hotels, AirBnB is the new way to build hotels. They are utilizing real estate and the sharing company to compete with hotels, not just send traffic their way. So if they aren’t exactly a travel company, how does that help the sector? 

When AirBnB goes public, it creates a new player in the “travel industry acquisition” game. A Himpunk with a large valuation may be a small cost for AirBnB to better compete with OTAs earlier in the booking process. The tours, activities, and things to do component of Gogobot may fit into their extended hospitality services, and they could buy instead of build. If the largest players get acquired at large numbers, there will be a resurgence of interest from investors to find the next thing to disrupt the travel industry or sell to the incumbents who now feel threatened by AirBnB. 

AirBnB is not far from Kayak’s traffic:

The size of the travel industry will continue to attract entrepreneurs and investors, but it may take a few big exits to help former travel-investors to get back into the game. 

My advice for travel entrepreneurs, is to think about ways to serve specific markets, like the breakouts in the Indian and Brazilian markets; monetize early to rely less on investors; and serve a market need so well that people are willing to pay a lot of money for the service (not just affiliate fees). I’ll save my ideas on open opportunities for another post. 

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This post is the second in our “Lessons from the USV Diversity Summit” series. In December, USV hosted our first Diversity Summit. Below are some of the most helpful insights we gathered about how to take action. If you are just joining the conversation, you can read the first post here.

Start somewhere

Who starts the conversation around diversity? Who will be the first one to say something, out loud, to your team? How do you start that conversation?

Talking about diversity can feel awkward. Many of our attendees found themselves  leading the charge at their companies simply because they were the first person to speak up about it. Others had their leadership role bestowed upon them because they happened to be the first person on their team to represent diversity.

A lot of our attendees told stories about how their company first “discovered” they had a diversity problem. Sometimes the team’s lack of diversity was pointed out by an outsider: “So how does it feel to be the only female engineer in your company?” Other times it was something people realized for themselves: I noticed I was the only black person  at our all-hands meeting of 100 people.” Occasionally, diversity came up because employees realized there was a mismatch between the team and its customers: “As a team of  ten white male engineers, we don’t represent the market or our customers.”

Most of the time, it was up to the diverse member of a team— whether they were a minority with regard to gender, race, or background—to take up the diversity initiative themselves. This can create the impression that diversity is important to that person simply because they want more representation for people “like them.”

We asked our attendees to tell us about their fears and concerns. Here are some of the sentiments that emerged:

• “I’m a woman and I’ve never been discriminated against, but I know others have, so I’m making sure that behavior doesn’t continue for others.”
• “I’m Latino, and I know a number of talented engineers of all backgrounds. I don’t want them to feel like an outsider like I did when I joined.”
• “I’m the only male on my team, and I don’t want my opinion to be perceived as, ‘this is what all men think.’”
• “I was the first female engineer, and I wanted to show other female engineers that they would not feel alone here, the way I felt alone when I was the only one.”

Waiting for minority team members to start the conversation themselves is dangerous, because if there is no diversity in your team, how will you ever start? So don’t wait. Start the conversation now.

If your goal is to be the best place for top talent to work, it should be the best place for anyone—even if they don’t work there yet.

We’re all in this together

No matter who or “what” you are, diversity belongs to all of us. To frame the discussion about diversity at our summit, we discussed unconscious bias early in the day.

We are all different from the next person. We all have biases that we use in our decision making, biases that come from  our upbringing, our life experiences, and our interactions with the culture and the world.

Leaving it to the professionals, we played a portion of Google’s video on unconscious bias. The video explains the importance of bias awareness in how a tech company successfully makes decisions. The video is worth watching in its entirety.

The concept of unconscious bias gives us a shared language to frame our personal experiences. Instead of saying “we,’” “them,” or “us,”—or using general statements like “men like to…” or “as Hispanics, we…”—we instead each framed our own thoughts around bias, conscious and unconscious.

Here are some examples: “I’m biased in favor of  iPhone users, since I’ve always used an iPhone and never an Android.” “I’m biased in favor of  NYU grads, people who grew up in North Carolina, and middle children.” It’s okay to have these biases, but letting them go unnoticed is where we get into trouble. If I only want to interview candidates who come from NYU, I’m letting my personal bias affect decisions for my company. If I believe that people who have been entrepreneurs just “fit the culture better,” I may not realize that I’m biasing a hiring decision. The idea might sound logical, but that doesn’t mean it’s true.

In your conversations, you may find it easier to talk to your peers about diversity if you have thelanguage to talk about differences, rather than generalizing. Instead of saying, “I only hire SVA grads,” you might try substituting, “In the past, I’ve had a bias toward hiring SVA grads.” Modifying the language you use in your mind can make the difference between weighing a decision and having your mind already made up.. It’s the difference between being open to discussion vs. being closed.

We found that establishing a shared vocabulary empowered us to speak up, be empathetic, and encourage without turning the conversation into an “us vs. them” type argument. Unconscious bias training is a great way to kick off diversity discussions, but it is only the foundation of a larger conversation. There are more unconscious bias resources listed here. 

Allies and open conversations

The most cringeworthy stories we heard about at our summit came from people’s efforts to try to “get people talking about diversity.”

One company had held an all-hands meeting to discuss diversity. Anyone could weigh in, share ideas, and speak up about what they wanted changed. To ensure that employees were building off each other instead of battling, the facilitators required everyone to say “yes, and…” instead of “yes, but…” The conversation generated a lot of ideas but left everyone exhausted. At the end, everyone had to come up with one word to describe how they were feeling. Most people chose words like “uncomfortable,” “tense,” or “stressed.”

In hindsight, brainstorming sessions that have more than 50 people are rarely productive. Extroverts excel, introverts hang back. Leaders speak up while newer employees proceed with caution. It’s not the right forum for most topics, and it;s not a great forum for diversity discussions either. The meeting generated conversation, but nothing moved forward until a smaller group took the lead and started to make changes.

Starting with a small group proved to be a successful strategy for several other companies as well. Two different companies set up lunches to try to bring women in engineering together and ask: “What can we be doing better?” One company found that just creating a space to discuss the question already helped the attendees feel supported and heard. At the first meeting, only women were invited. Once the safe space had been established, the second lunch was open to anyone. Ultimately, the meetings led to several positive outcomes: (1) women in the company were encouraged to attend the Grace Hopper Conference, the leading conference for women in engineering (2) the company started requesting a Code of Conduct from conferences attended, and (3) the company pledged to have more diverse hiring panels.

Several companies advocated starting the process by assembling a small group of people to brainstorm about objectives, then bringing in more people only after the small group had a handle on what they wanted to accomplish. The small groups don’t need to be limited to one type of diversity. It’s enough to start with a small, diverse group of individuals who all share the same mission: to increase diversity on their teams.

Defining Diversity

Once you’ve gathered your small team of allies, the next step is to define what diversity means to your company.

The Equal Employment Opportunity Commission (EEOC) has an extensive (and evolving) list of classes who are protected from discrimination. Since discriminating against members of these classes is against the law , it’s probably a good place to start. But you don’t have to stop there.

Here’s Stack Exchange’s philosophy on diversity in the workforce. This statement can be found on all of their job listings:

Diverse teams build better products

Legally, we need you to know this:
Stack Exchange, Inc. does not discriminate in employment matters on the basis of race, color, religion, gender, national origin, age, military service eligibility, veteran status, sexual orientation, marital status, disability, or any other protected class. We support workplace diversity.

But we want to add this:
We strongly believe that diversity of experience contributes to a broader collective perspective that will consistently lead to a better company and better products. We are working hard to increase the diversity of our team wherever we can and we actively encourage everyone to consider becoming a part of it.

Another company defines it as “Diversity of Thought.” They built off the EEOC guidelines, but expanded it to include diversity of skillsets, education, and interests. They took what was required legally and added to it to make sure it felt authentic to their company culture and their existing team. Diversity belongs to everyone at the company, not just a subset of employees.

Start small, start today

One of the break-out sessions from our summit was “Talking about Diversity without Tension.” There were a few takeaways from that discussion. There will be always be tension, even in a small group. Trying to avoid tension may actually be counterproductive. It’s more important to have the conversation than to try to avoid it.

The best way forward is to start small. Assemble a small group of people to start the discussion in a safe space. Invite a professional trained in diversity or unconscious bias to join you. Or bootstrap early conversations with online resources. We’ve collected a few recommendations in the Diversity Hackpad here: Unconscious Bias Resources. Whatever the size your company, start your small group conversations today.

The next post in this series will explain how to take the small group conversations and extend them to the wider company culture.

Something to share?

We want to hear from you! If you or your team have something to add, please share in the comments below or on Twitter.

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At USV, we often get our portfolio companies together to discuss topics of interest, as well as challenges and lessons learned. In 2014, we held 42 such portfolio get-togethers. In December, we hosted our first Diversity Summit. The focus of the discussion was to increase organizational diversity to gain competitive advantage.

At the event, we had 28 attendees from 13 different companies with a range of job functions: Engineering, People, Community, Sales, Business Development, Legal and Product. Everyone had the same goal: to increase diversity in their organization.

I wanted to share the insights we learned and what we found helpful to take action.  

Why is diversity important?

To prepare for our event, I connected with Lisa Lee, Pandora’s Head of Diversity. She shared the importance of setting context around the topic in a professional setting, especially since conversations can easily drift into discussions on social justice, privilege and entitlement. Those topics are worthy to inspect, but they detract from the organizational conversation of increasing diversity for business success.

To set context, she advised addressing two key questions early in our discussion:

1. Do you want your company to increase your company’s competitive advantage? Extensive research has proven that more diverse perspectives leads to more innovative ideas and better financial returns.
2. Do you want your company to one day serve millions of people? It helps if you know how different people in the population think. If companies want to last, they need to think about this early.

Grounding the discussion in these questions early on will help ensure a productive conversation about diversity in your organization, both in strategy and in practice. The topic is vast, but you don’t need to be an expert to start making changes. If you want to learn more, go find experts willing to help.

To help get up to speed quickly, here are the most cited research studies around the benefits of organizational Diversity. The research can be summarized into the following:

• If you want to create the most innovative ideas, you will benefit from diversity of perspectives within your workforce.
• If you want to increase the financial returns of your business, encourage gender diversity on your executive team and board.
• If you want to build a massive company that serves a global population, consider the diversity of your workforce in order to best serve those customers. 
• Having diversity of perspectives can create more innovative ideas, but will likely expand discussions and debate.

Because diversity is such an important topic, it must be prioritized early in a company’s life.  As Lisa put it, “I’m a believer that you have to start thinking about diversity early, otherwise it just becomes really, really difficult the bigger that you grow. What you want is to grow your company where diversity is one of your core principles and core values, because trying to inject it later on is inorganic and it’s off putting to people.” Start today.

Challenges of making change

One of the biggest challenges of successful diversity initiatives is simply opening the discussion.

Google, Facebook, Yahoo, Intel and HP shared their workforce diversity numbers publicly after Tracy Chou, a Pinterest engineer, called for more transparency about their diversity efforts. Even though these companies are making progress, the media and social media reactions are largely negative. There is media finger pointing at what isn’t achieved yet, not focus on what is being done.

Diversity challenges are across the tech sector, from startups to venture capital. At USV, we know we’re far from diverse. Fortunately, we have learned a lot and we want to continue to encourage progress internally, within our portfolio, and the broader tech community.

Diversity initiatives are currently happening behind closed doors. Best practices are siloed and we’re not learning from each other.

An open diversity conversation lifts all boats. It’s what the tech community embraces: transparency, failing out loud, sharing strategies, cheering on those who are making changes, and using post-mortems to learn from things that didn’t pan out.

Diversity at work

Even within the walls of a single organization, it can be difficult to raise the topic of diversity. When asked amongst our summit attendees, the challenges raised were: discussing and defining diversity, creating a plan, and prioritizing initiatives to move forward.

To address these challenges, our group came away with a number of different approaches that I’ll expand on in more detail in this blog series. These include:

• Getting Started: having the discussion, language, and online tools
• Company Culture: embracing diversity, inclusive mission vision values, and performance
• Recruiting: tactics, expectations, interviews, job postings, resources, and external organizations
• Constant Evolution: Feedback, measuring success, training, and materials

Diversity is an urgent and important issue; the best time to start is now. Let’s open the door on this topic.

Diversity is never done

To wrap up our day, we had Maximo Patiño, Associate Director of Admissions and Diversity Strategist, join us from CUNY Graduate School of Journalism, bringing 14+ years of diversity leadership and advocacy. He answered the questions left open from our discussions and affirmed we were heading in the right direction. His most profound advice, however, was this: “diversity is never done”.

Just as innovation is not something you “achieve” it’s something you constantly strive for and try to inspire, diversity is never done. Both a relief and an inspiration, diversity is an initiative that will constantly be part of your company. The goal then is not to “fix” or “solve” diversity, it’s to encourage it.

Something to share?

If you or your team have something to add, please share in the comments or on Twitter.

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For the full list of Diversity Resources, including the research mentioned above, you can view the list here. 

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Caring is about giving time. It can mean putting time into it, going to visit a friend, showing up, or listening when someone needs an outlet. Caring can mean saving time too, running an errand for someone, making a meal for them so they don’t have to cook. So when thinking about how to scale caring, the biggest limiting factor is time. 

Awhile back my colleague Alexander started hacking on the Gmail API. He was building some great tools for USV. He built some cool things and he’s continued to build new ways to better manage the inefficient and mundane in the inbox.

I threw out the idea about a better introduction machine. To create a little bot to take the email introductions and make them less painful on both sides: the introducer, the introducee (hardly a real word) and the person who wants to connect. He kicked it around and within a few days had an early prototype of BrittBot.

The premise of BrittBot was that you could make an introduction one direction allowing the receiver to opt in by clicking a “yes, introduce me” hyperlink. That would create a new email introducing the introducee to the person who wants to connect, the introducer (me) would be BCC’d to know the connection went through.

Early on, I usually only utilized the tool for external connections. More for the ‘long shot’ introductions. A person who I didn’t know well who wanted to connect with someone in our portfolio. That put the power in their hands to say yes to the introduction or not with no 'guilt’. I was excited because it made introductions really seamless for them, they didn’t even need to create a new email.

The tool got a lot of positive response. “Wow this is so great how can I get an introduction bot?” “Cool - that’s like magic!” A win in inbox efficiency! More power to the people I saw it. 

Now, when I shared the premise with some my colleagues, they had different reactions. They thought that the reason the introduction emails are meaningful is because you actually have to go through the manual process of writing, then making sure the person says yes and then creating a new email. They saw that exact amount of work, that extra bit of inbox pain, was part of what made the introduction powerful. 

Now, when thinking of the tool, I thought the opposite. I saw it as the email introduction bot, though used sparingly, respected the introducee’s time. They were in control of their own time and could accept with little effort, or simply ignore it. It was a way to care about them through efficiency, not effort. 

I’ve thought a lot about how to scale caring. I’ve spent time face-to-face with 1,000 different people from the USV portfolio last year alone. I care about each one of them. I want to know what they’re working on and how they’re doing, but I’m unable to give as much time to each person as I’d like. Technology enables me to gain more time to do the work to support everyone, the trick is finding the line between giving more time back vs. putting more time in.

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I’ve been working on a longer post (maybe too long) on scaling caring in a VC community. If you’ve found things that work for you, I’d love to learn more. Drop me a note on Twitter, @br_ttany or leave a comment on Disqus. 

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[– Special deal, join ClassPass, get $50, I’ll give $50 to Defy Ventures –
Update 3/8: We raised $150 for Defy Ventures!]

Last night I learned it was more ‘Bhangra-like’ to use your fingers in a thumb-to-fingers clap motion, “imagine you’re flicking an apple off of a tree”, than hold your fingers straight up with a wrist twist, referred to many as “turning the lightbulb”. 

I’m not a regular at Bhangra & Bollywood Dance class by any means. This was my second time ever taking a Bhangra dance class. I’m a long way for this but at least I have few new moves.

Would I do it again? Sure! I was joined by three friends and it was a ton of fun. Would I go every week? Maybe not.

The great news is, with ClassPass, I can decide how often I want to go back without fear of missing out on a ‘package discount’ for buying X number of classes that would need to be used by Y date.

I’ve been singing the praises of ClassPass since I joined in October. I quit my monthly gym membership and instead take classes at different workout studios throughout the city. I’ve recruited a number of friends already and they’re hooked. Currently, for $99/month you get unlimited access to their 200+ gyms in NYC as well as the ability to take classes in their other markets (including SF which is great for my regular trips to the west coast USV portfolio). From ballet to spin, boxing to crossfit, dance to parkour. They have it all.

I’m not employed by the company nor are we investors. I’m simply a huge fan and have $50 for you if you join too — more info below. With great enthusiasm for product, I’ve had some questions about how the business will grow, sustain and live in harmony with the studios it helps promote.

Bucking the gym business model

I quit my monthly gym membership to use ClassPass in exchange. Health Club business models are largely subsidized by individuals who pay each month but rarely use the facilities. Contracts with high cancellation fees cover the labor costs, depreciation on machines, and upfront equipment investment.

Gyms focus on signing up new members, and ideally would find the right mix of individuals who want to use the gym at different times or not at all. They have limited capacity at peak times, so some have become more dynamic to charge access for non-peak-hours. Access to multiple locations is usually another add on. Personal training and other services can be layered on top. That’s the extent of dynamic pricing.

That means, if you go once a month or thirty times a month, you’ll pay the same price for the majority of the service. Less frequent members subsidize the more frequent ones.

Through ClassPass, you currently pay one fee for unlimited classes per month. This is the same model that gym memberships employ. It’s easy to charge but it may be missing additional value that can be captured. As a consumer, I hope they don’t put in tiered pricing for frequency of use, but they very easily could. They already track the quantity of classes you take and count them on a monthly basis.

Additional layered services could be earlier access to book classes or a “spending per month” that could cover costs like renting spin shoes or extra towels at gyms that offer those upgrades.

Will studios win or lose?

ClassPass limits 3 visits per month to a particular gym. That means if you find a class you want to go to twice every week, you can’t do it. If you discover a class you love, you can take the steps to setup a membership with that studio directly. You can keep your ClassPass membership as well or cancel it and just commit to the ones you want.

The alternative is to arrange some clever hacking to build a schedule that allows you to max at your 3x classes at your favorite gyms and then find close supplements for other days. If you want to spin 2x a week each month, you need to find 4 studios with classes you like. Or if you travel for work, it may mean finding 3x studios in NYC and 1x in SF to use. That’s a bit more work and a bit more to keep track of. If you find a class you absolutely love, it’s probably work committing with them directly.

Does this model work better for studios or worse? Does it cannibalize business from individuals who would normally pay $10-$35/class to come 3-4 times a month? Or does it expand their market. Since they can reach more people, do they raise more awareness and ultimately sell more memberships directly? Does ClassPass make the pie of ‘class-takers’ larger so all boats rise?

Discovery of new studios was limited to word-of-mouth, foursquare, Gilt City, and online promotion. It would be a fair bit of work to sign up for the different classes, compare prices, and commit. On top of that, most of the studios are small businesses. Their pricing could be confusing. $100 for 10x classes or $150 for 20x if you use in the first three months. First class free or first week unlimited for $10. They would want to sell you so early in the process that it could be distracting from just figuring out whether the classes and schedule would fit.

The discovery wasn’t great or easy. That may be a win for the studios as switching costs were high, but a loss for new studios with little clout.

Margins and monetization

ClassPass doesn’t rent any studio space, nor do they supply free weights or mini trampolines. They are the information layer that connects the physical studios. I don’t know the intimate details of their monetization, but I know they currently only charge $99/month for members. That money likely goes largely to the studios and a small take rate is used to cover development costs, a sales team and operations.

How much money does a studio get? If a member goes to 20 classes a month and only pays $99, and let’s say ClassPass takes 10% which would include the credit card transaction fee,  that would mean at most (with $10 going to Classpass) the studio would get $4.50 per class. That’s pittance compared to the $10-$35 they may charge for each class.

Now, $4.50 may not be much, but it may make sense for the studio. Once a class kicks off, it’s a fixed cost. Whether there are 2 people in the class or 40, the instructor, rent and equipment is already paid for. If a studio is able to increase utilization for each class, the additional students, at any price, are worth taking. Now, they need to consider costs like depreciation on equipment for that additional student, like a spin bike, and the impact on experience for other attendees who are paying full price and expecting access to showers, enough floorspace, etc.

Studios would just have to make sure that financially, filling more classes, at different prices, means they cover their fixed costs. Having every customer on ClassPass may not work out for them.

Cash flow also comes into play. I’m not sure if ClassPass buys blocks of classes from the studio each month or only pay commission on successfully booked classes on a monthly basis. Studios with regular members usually get membership dues before they host the classes, easing forecasting and cash flow. ClassPass may pay later.

Join ClassPass, get $50 & support Defy Ventures

I’m excited to see where ClassPass goes next. They have great team they’re building in NYC and a huge network of studios they’re growing nationwide. I’m sure their revenue model will be evolving but I’ll be enjoying all of the benefits at the current price while I can.

If you’re interested in signing up, they are currently running an offer to give $50 to anyone who signs up, and give $50 to anyone who refers someone in.

Now here’s the deal, if you use the promotion link to sign up for ClassPass by Sunday 1/19 (promotion extended!), you will get $50 for yourself and the $50 that I receive I will donate to Defy Ventures, a fantastic non-profit organization that transforms the lives of people with criminal histories through entrepreneurship, employment and character training*. You get ClassPass, $50 and you get to support a great group.

Update 3/8: We raised $150 for Defy Ventures!

[*Full details: This offer is limited to the ClassPass promotion which ends 1/18/15, 11:59PM. ClassPass does not provide cash awards but giftcards. If you sign up it will be $99/month but you’ll get a $50 Visa Giftcard in the mail. I get one too. I will donate the cash equivalent of the $50 giftcards received. ClassPass may notify me if new members sign up through that link, I may not have access to your email address so please feel free to send me a note on twitter that you signed up so I can say thanks!]

You can learn the whole world through a cup of coffee. 

Industrial integrity of a paper cup, the malleability of a plastic lid.

Polymers and isotopes mixed in.

Chemistry, boiling points, dissolving, and separating particles. 

Dairy products, measurements, and agriculture. 

Barter for beans, taxes on border crossings and global labor markets.

Dollars and cents of a hot beverage. 

Consumers and nonsense.

Storage, scaled operations and resource management. 

What fills your cup in the way you see the world? There is no problem too small to spark curiosity. The path may wind you into new worlds quickly. 

• This workout is tough! Lots of cardio, body weight exercises and Coss Althetics-custom moves that will get your heart rate up. There is also an element of surprise that you’ll have to take the class to see! 
• Though tough, this workout is for everyone. The instructors are positive, responsive to individuals’ needs and encouraging. Anyone can access this class. 
• Positive attitudes abound. Workout classes in NYC are normally treated like one-on-one coaching. You ignore everyone else in the class and only interact with the instructor. Not here. You’ll be encouraged by others, you’ll be cheering people on, and you’ll actually get to introduce yourself to the people around you. Great vibe, especially for a workout that can be pretty challenging. 

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Today, computers can touch and sense like machines. Scientists have created artificial skin that senses, and stretches like the real thing. 

On the flipside, in the transhumanism movement, humans have tried to add their number of senses through implants. I first found mention of it through msg’s reblog. You can read the full excerpt here: 

“This is big in the Grinder [not Grindr] community. Most people start off by implanting magnets in their fingertips, which gives you the ability to feel magnetic fields. Your fingertips have lots of nerve endings jammed into one area and they are really sensitive to stimuli. Magnets twitch or move in the presence of magnetic fields, and when you implant one in your finger you can really start to feel different magnetic fields around you. So it is like a sixth sense. At first you will be waving your hand around appliances, probing fields like someone looking for a light switch in the dark. After a few days or weeks you will almost forget you have the implant because your brain has fully incorporated the sense into your normal world experience. When you sleep you will notice that even your dreams have changed to include the sense. You can now perceive an otherwise invisible world.

This makes many curious about all of the other things happening around them that they can’t see and they want more. So let’s expand on the magnet thing. We can buy all kinds of different sensors to detect heat, radiation, radio signals, wifi, whatever you want. If we wrap a wire around our implanted finger and attach that wire to our new sensor, we find that the wire creates a small magnetic field to the beat of the sensor. This of course makes our magnet twitch, and now we can feel heat from a distance, feel wifi, or whatever.

Why limit ourselves to feeling these sensations? We have other senses we can induce synesthesia in. I got some media attention in June of 2013 after I implanted headphones in my tragus to do just that. I had some practical reasons for doing this in addition to my thirst for exploration. A few years earlier I suddenly became legally blind in one eye. Lenses cannot correct it and my original eye doctor informed me that the other eye was likely to follow, at which point I would be legally blind, lose my job, etc. With this inevitability in mind I decided to be proactive. Ultrasonic rangefinders are devices used to determine how far away an object is. I knew that most blind people find acoustic variations help them identify the proximity of objects, so I figured I might be able to amplify this by converting rangefinder data into audio I could send wirelessly to my headphone implants. It turned out to be much more complicated than I thought, but that is a part of Grinding that I have come to appreciate. My setbacks lead me deeper into the rabbit hole of audiology where I discovered knowledge that has unlocked a thousand more possibilities.

I’d say that 25% of the people I talk to about sensory enhancement think it’s really cool and some go get implants themselves. The other 75% will nod their head and hope the conversation ends or they laugh and ask “why would anyone want to feel magnetic fields?” I get asked that question so much, and I still find it hard to articulate. They usually point out that “you don’t need it,” to which I counter “what if you lost the ability to taste? You don’t really need it to survive.” Ask anyone with an implant how they would feel if they lost the implant, and almost all of them will tell you they would miss it. A small bit of richness would be missing from their life experience.

Visible light is but a tiny portion of the greater magnetic spectrum that we cannot see. If we modeled the entire spectrum as a road stretching from LA to New York, the amount of visible light that humans can see would equal a few nanometers. Humans, from our allegorical caves, have nonetheless managed to form and test theories about things at the edges of perception but these discoveries took thousands of years. Where would humans be now technologically if we never developed sight? How long would it take us to theorize the existence of the aurora borealis or to hypothesize about the existence of stars? This reduction of input obviously cripples the rate of input.

So is the opposite true? Would expanding our senses accelerate our advancement? My answer is yes. Some Grinder friends of mine formed a team called Science for the Masses to discover if they could biologically push human perception of visible light into the near-infrared spectrum. This is a small increase, around 6% above our current abilities. The impact is dramatic. The new light allows you to see through fog and haze, tinted windows, and some clothing. Stars can be seen during day hours. Subtle changes in blood flow can be seen under the skin, allowing anyone to detect circulation problems and find clots. Seeing blood flow takes some of the guesswork out of determining what mood your date is in and lying becomes nearly impossible. Imagine how this awareness would have altered human history, politics, art, courtship, and relationships. Does human psychology benefit in a world where sincerity and emotional context can be seen with the naked eye rather than hypothesized or conjured? The new layers of info I’ve detailed above are actually just the tip of the iceberg. The real magic of sensory expansion comes from finding deviations and surprises that don’t fit within our scientific understanding because it makes us reconcile our mental models of the world with reality.”

Full article: Zoltan Istvan interviews Rich Lee, http://ieet.org/index.php/IEET/more/istvan20140708 (via grinderbot)

The loss of senses is no longer a limit. The senses we’re born with aren’t either. Replicate humans with machines or replicate machines with humans. What side are you most excited about? 

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Mobile is the future, or it was a few years ago. The future is something new, something we haven’t seen yet, the question is whether we ever will. 

No, I don’t believe the next great innovation will never arrive, instead, I think the next technology for change is coming but won’t arrive in the form of a device. Instead, it’ll be powered by each of us, the last millimeter of the internet. 

The Accessible Web
When discussing human interaction with the internet, the age of personal computers was built on top of the ‘last mile of the internet’. Getting internet connectivity to personal homes and office spaces. Talk of the 'last mile’ has rose again as we talk about net neutrality, and the need to protect an unbiased connection. 

Mobile brought the 'last meter’ of the internet. It changed our interaction with the web. We weren’t constrained to using the web only in a fixed place. The access 'anywhere’ nature of mobile in combination with more sensors, app ecosystems and global adoption have created a wave of new innovations since their introduction. 

Wearables have provided additional pieces of sensor data, but most are more an extension of the mobile device than revolutionary platforms for a new ecosystem. They are good, but I’m not sure if they’ve gone far enough.

The step after that, the last millimeter, is about bringing perception to our interactions with the web. It brings the ability to learn about us, the things we do, and the things we want to do. Now this is not just 'us’ as the masses, but a personalized reaction to what you, as an individual, do.

What would the last millimeter look like? Only time will tell, it will likely leverage mobile phones for their ability to reach the cloud, so the technology may not look different. 

The biggest difference will be how it feels. 

Near Future
Right now, I can geofence my Hue lightbulbs to turn on when I arrive near my apartment or am the last one to depart. It’s a sweet gesture but it’s not always accurate and it requires keeping a 'geo’ ping on all of the time.

Now, my human logic would want to include more complicated tasks and nuance. Don’t geo-ping if I’m at work. If it’s dark out, turn the lights on. If someone else is in the apartment, don’t turn off the lights until they leave too. Maybe on different holidays Hue could surprise me with a different color theme matching the date of celebration. There are many things that are possible, but will not happen. The expense of setting up rules or daisy-chaining IFFT commands together do not provide enough value.

Okay, Hue lights are geeky and none of those changes are actually going impact my day-to-day. So let’s take something a little more mainstream (for a smart-phone carrying urbanite).  In the winter, I usually take the subway to work. I know that to be at my office on time, I have a certain number of minutes of commute time, just to be safe, to get there on time. I do this everyday so I don’t need advice on how to get to work. 

However, occasionally the trains aren’t running, or they aren’t running on time. I don’t know this until I arrive on the platform. I don’t think to look for this information as I have no reason to suspect my train won’t arrive. I also have little incentive to setup a system to push myself that information when 95% of the time my system works.

The last millimeter apps think like me. Oh hey, you normally take the 6, and the 6 isn’t running this morning. I should plan an alternative route to get to work. If I have more than enough time, I could walk to the N. If it’s nice out I could see if there are Citibikes nearby. If I’m rushed for time I should hail a cab. This logic is occurring in my brain, but actually coordinating additional information to make those decisions is stuck in my phone. I just need those two pieces to work together a little bit closer, with the hope most of the processing will happen on the cloud side and not require me to push buttons, switch apps and anticipate the 'failure points of my commuting routine’. 

The impact of these examples is trivial, but the power of what this level of connection could provide makes me wonder.

Could the elderly have better medical care if they didn’t have to setup the technology to enable reminders to take medicine or remember to check their pacemaker batteries?

Could we distribute excess food supplies in my location to a place in need nearby, because demand and supply are perceived at a larger scale? 

Can we accelerate medical discoveries because learnings can be aggregated, with attribution, in real time? Not in the sense that the technology will be putting together the pieces, but it will enable those doing the work to realize what is going on in other places. No need to 'search’ for discoveries or setup notifications. 

There are many great blogs, books, and films that explore the future and our relationship with technology. Of course, it’s surrounded with questions and concerns around privacy, legal responsibility, and societal changes. Those topics are part of the innovation we’ll need to see too. 

The future is almost here, I’m curious to see the early bridges that lead us to the next great thing. 

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Every technology companies’ hiring process has bugs. Not software glitches, but human error, flaw, failure, and fault that causes it to behave in unintended ways.

Hiring practices include only reviewing candidates that attended a small list of schools. An incredibly talented engineer is skipped because his school isn’t recognized by your hiring manager.

An interviewer couldn’t articulate it exactly, but felt the candidate wasn’t a fit for the company culture. The interviewee was a great match for the role, but the opposite personality type of the interviewer, someone from a different team.

A star candidate becomes less interested in working on your team when they realize they are the only person in the company who is not like everyone else. Your hiring manager assumes the candidate took another role (but doesn’t ask) for other reasons and moves on to their second choice.

Leadership insisted the ‘big job’ go to a candidate that came from a big company. The hire had only worked on large teams, experience that had little use within the small company where they were hired. High salary paid, recruiter compensated, and an employee who left after 12 months.

The hardest thing about bugs isn’t the error they throw, it’s finding them in the first place. Only companies who invest time in running QA on their hiring process will build the innovative teams they want. That of course requires knowing what you want in the first place.

Having a hiring process is important, almost as important as remembering that it’s all based on the bias of the people who built it.

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If you asked me a few years ago about my morning routine, I’d smirk. It was more like a morning scramble. Wake up with just enough time to hop in the shower, get ready, and get out the door.

As an entrepreneur, it seemed practical. Maximize time at the office and sleep for 6-7 hours to get back into the office early the next morning. Hustle they say! I made morning multitasking an art: testing tips like brushing my teeth in the shower and dictating my to-do list in audio notes while getting ready. I was incredibly efficient, or so I thought.

I wasn’t efficient, I was running fire drills. And it burned me out over time. Snoozing more often than I wanted. Distracted the first hour at work after a hectic schedule. I got the hint, I needed to rethink my mornings, but made only minor adjustments until I learned a new way from my fiancé Neal.

His routine was solid. He woke up at 6am, made a cup of coffee, and enjoyed it while listening to the news. At 7am he headed out for an hour workout. He then returned home to get ready and arrive at work by 9.

This was crazy when I first learned of this routine. He had 3 hours before he even got to work! What about the sleep? Aren’t you tired? It’s still dark at 6am!

Skeptical, I accepted the challenge to try it. After a few days of “I’ll just reset the alarm for 7am instead..” I got the hang of it. Let me tell you, it was really pleasant! Quiet time is so rare that it was like finding hidden treasure. Calm, quiet and no obligations, even email is pretty slow at that hour.

Now I’m hooked. The best part about it is that no matter how hectic the day gets, there is always time that belongs to us.

Neal and I now use 6am - 7am as time together, to chat, share, and listen to the news. Although meetings or workouts sometimes conflict with the set schedule, we stay pretty true to it.

It has other perks. It’s nice arriving at the office with a fresh mind. And after work, there is no pressure to squeeze in a workout at the end of the day.

I’m still working on time to write more, and I’ve heard from many people that the morning is the best time to do it. Maybe it’s time to start dictating blogs to my phone. I’ll save that for another day.

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The most common questions I hear from startup founders and team members are, “What are the best practices? What lessons have others learned? What’s coming next?”

The purpose of the Maturity Framework Series is to help startup founders and teams to anticipate what is coming next. This post will specifically look at the Dunbar Stage, when a company grows beyond 150 employees.

Company Stages by Number of Employees

Links to full posts detailing the Early Stage, Momentum Stage, Expansion Stage, Growth Stage, and Scale Stage.

Dunbar Stage:  150+ employees

I’ve intentionally left no limit to the capacity of the next stage, no end state or upper bound. It starts at 150 employees and grows from there. I’ve done this for two reasons. First, the density of the USV portfolio companies hover between 30 – 150 employees, we have the most network knowledge in this company size. Second, there are changes that need to happen at this size of an organization that will continuously be required. I intentionally did not include pre-IPO company requirements here as it has less to do with employee headcount, and more with other factors. If you’re interested in what’s required of a pre-IPO company, you can read more here.

Now, what is the Dunbar number and how will it influence our company structure once we have over 150 employees?

“Dunbar’s number is a suggested cognitive limit to the number of people with whom one can maintain stable social relationships. These are relationships in which an individual knows who each person is and how each person relates to every other person. This number was first proposed in the 1990s by British anthropologist Robin Dunbar, who found a correlation between primate brain size and average social group size.^[7] By using the average human brain size and extrapolating from the results of primates, he proposed that humans can only comfortably maintain 150 stable relationships.^[8] Proponents assert that numbers larger than this generally require more restrictive rules, laws, and enforced norms to maintain a stable, cohesive group.” (Read more on Wikipedia)

The TL:DR version is, our brains can only sustain 150 meaningful relationships at one time. Now, there are many questions as to whether the actual limit is 150, look at Facebook or LinkedIn connections, with some users maintaining 250+ contacts, but when we focus on individuals within an organization, all working together, this number is a typical break point. Fast growing startups may feel this break point between somewhere between 125 and 225, but we’ll use 150.

Before we get into the specifics of the Dunbar stage, let’s take one minute to step back to think about the scale of 150 people. Think about sitting in your living room with 15 people, and let’s say they invite 15 more people. You’re now standing because you don’t have seating for 30. Now the party next door comes over with their 30 people, people are clumping in smaller groups to have a conversation and you’re worried about the line for the bathroom but with 60 people, you can still look around the room and recognize faces. Now imagine the restaurant down the street invites all 75 of their guests to your party. People are elbow to elbow, it’s impossible to hear the person next to you because the noise of the crowd is so loud. You now have 135 people at your house and your 15 best friends just showed up. You let the chaos bubble around and hope that no disagreement occurs. At one point you try to make a toast, but your attempts at quieting the crowd leads nowhere. Time to make room for the new guests soon on their way.

150 people is a large group, that requires a certain physical amount of space to be comfortable, and that doesn’t touch on the social constructs required. As an employee, even if you know everyone’s name still, you can no longer know exactly what everyone is working on, and when. The politics of each team are now local, not team-wide. You have blind-spots. Just like at a party, you can’t see how everyone is interacting at once. That’s okay. That’s the point, to scale with trust and distributed decision-making.

A successful organization requires new structures, policies and organizing principles to build the trust required to function at this size. As a CEO, you need to trust your management to drive their part of the business, take care of their teams, escalate any issues, and provide feedback as a whole. Your organization will be a collection of smaller organizations working together, not just a collection of individuals. It’s a society now, be mindful as to whether you’re building it like a democracy or a dictatorship.

Depending on the business model, early success, and senior leadership, the scales may be working in your business unit’s favor. For example, in an engineering-focused company, the early team might be 50-75% engineers. Resources, headcount, and positioning efforts always favored engineering. As the company grows, the demand for additional engineers may slow, but the demand for sales may grow. At 150, the team may be 50% sales people, 30% engineering. Resources will flow accordingly.

Shifts in team focus are not a good or bad thing, just a shift that should be addressed, acknowledged and not ignored. Folks on those respective teams will see that shift in power and it may ruffle feathers. Ex:

“Why does marketing get more resources now?”

“I want to work on the sales team instead of BD, they have more engineering resources since they’re bringing in revenue.”

The new team structure is not bad, but the change from how ‘things were’ won’t go unnoticed. Address them, communicate and react accordingly. The danger occurs when this information is passed only in back-channels and it creates uncertainty. You will have uncertainty, be open about it in order to align on what is actually uncertain. Like a rumor, if you let it out of your hands, you lose control of the message.

Leadership needs to err on the side of more communication and teams need to build more process. I can hear it now, “Process? Yuck! That’s only for big companies, that’s why I joined a startup, to get away from process.” You will face this, the default for most startup companies is to reject process in favor of innovation. The often overlooked point is that good process enables faster innovation.

Early companies have process, they just don’t label it that way. An engineer may build a prototype on their own, bring it to lunch to get some feedback, and make improvements afterwards. That is a process. There aren’t many parts to it, but it is a process, something that doesn’t sustain over time, or just gets sloppy. Imagine 10 engineers all clamoring for feedback on their prototypes each day at lunch. It’ll get noisy, you’ll need to double the length of lunch. It’s sloppy process.

Scaling a company requires elegant process, the kind that is barely noticeable. If you are a fan of watching Apple Keynotes or engineering talks, you’ll notice the phrases like, “We looked at the landscape of what was out there and decided…”, and “Our team spent a year developing this new product” These individuals are describing their process in it’s elegance. They aren’t saying:

 “We had 2 PMs that prioritized this item in Jira for 4 months, we had to get feedback from engineering and senior management to push it forward in Q4. We had input from marketing, customer support, and HR to ensure we weren’t having any conflicts with external events that may delay or change our timeline. Then, we brought the idea back to the team, created sprint cycles for the next 6 weeks, making sure our backlog wasn’t creating roadblocks. Oh, and we also had to kill a lot of other things along the way to make it happen, there were disagreements and back-and forth emails among sales, product and engineering. Our CEO believed in it but actually wanted it 6 months earlier. But hey, here we are now.”

Process can be daunting to setup, as it’s never done. New components will come up that change what you need to do. App store review timelines have changed a number of times, each time it happens, everyone who has a mobile app has to consider the impact to their process. It used to take 24 hours for an app review and now it takes 7 days? Time to make sure you let communications know, so they know the press release will go out a week later. Don’t let the need for flexibility, stop you from putting process into place.

The advantage startups have over other companies is that change is part of the DNA. Building iterative products to serve customers is core to how the team works. Leverage that mindset for process, that it’s iterative, great products make people happy and things easier. Positioning critical process as  ‘internal tools’ or ‘business products’ can change the perspective. These are products that serve customers, those customers just happen to be employees of this company. As you did with the company, make sure you’re staffing correctly to enable internal tools teams to successfully deliver.

So how does a company at 150 or 300 evaluate their success? Take a look at three things:

• How do decisions get made?
• How does positive information flow?
• How does negative information flow?

These will help identify some of the largest organizational challenges as you scale. You will iterate on the ‘ideal’ outcome for each of these questions constantly. Build the communication and processes to make it easier to identify challenges and improve over time.

Current state of the organization:

• You know what you stand for
• Stable, but constantly changing

Things you’re doing for the first time:

• Hiring Executive coaches for your leadership team
• More management tiers
• Expansion in new markets or languages
• Reaching or settling into profitability
• Building teams that take care of your teams, like a learning and development team
• Introducing support roles in Sales or HR that are more focused on execution
• Build roles that are deeper, less wide.
• Increasing the strength of your finance and security teams.
• Thinking about IPO or late stage financing.
• Paying market rates for talent, once you’ve evaluated title-fit

What you’ve already solved:

• Better knowledge of your company’s ‘core focus’
• You know what you’re doing, your title may actually reflect what’s expected
• You continue to double down on profit generating parts of your business: engineering, product or sales.
• Expectations that team structure will change
• Right-sizing titles to fit the teams

If you have something to add to this list, please share in the comments or send me a line on Twitter.

To subscribe to weekly email updates, sign up here.

Footnotes:

*Please note, this outline is based off of trends I’ve seen in venture-backed startups. It very easily could apply to bootstrapped or non-venture funded companies, but not necessarily. In this outline I assume the company has taken funding.

**We’ve invested in a number of companies mentioned in this note. For a full list, visit our Portfolio Page or find opportunities with them through the USV jobs page.

The most common questions I hear from startup founders and team members are, “What are the best practices? What lessons have others learned? What’s coming next?”

The purpose of the Maturity Framework Series is to help startup founders and teams to anticipate what is coming next. This post will specifically look at the Scale Stage, when a company grows from 75 employees to 150.

Company Stages by Number of Employees

Links to full posts detailing the Early Stage, Momentum Stage, Expansion Stage, and Growth Stage.

Scale Stage: 75 – 150 employees

Getting to 75 employees happened before your brain could process it. This is often the case, you plan to grow slowly and then within a short period of time you add 30 new employees in less than 6 months. Welcome to the scale stage.

Your company is at the point where you know what your mission is, you understand your market and the most important piece is serving more customers faster. Your teams will grow quickly with more experts in the areas you need it. This is no longer a mystery, but it’s growing existing teams to have more manpower.

The skills required of your team are changing, make sure to let the team mature. The shifted demand for experts may mean a number of early employees are leaving. That’s not a reflection that you’re doing something wrong, that’s a natural shift. Some people prefer smaller teams, others want to change the work that they’re doing. Prepare your process to help employees who are exiting, including exit interviews and a standard for equity execution plans. An informal poll of our portfolio companies that less than 5 of your first 20 hires will stay with the company beyond 100 employees. 

You will need more leaders, managers and reporting structure. This doesn’t require you to set up a bureaucratic process. It does require providing enough structure that each member of your team can focus on doing their best work, not worrying about who owns what project or where they should take feedback. Imagine it as building a map to a new town. When it’s two houses, it’s easy to find your way, when you have 20 houses, you’ll need an easier way to identify where people are and what they are working on. Since you’re adding employees quickly, that organizational structure will help new hires even faster. 

Focus should continue to dictate what gets prioritized. Make sure the senior leadership team you’ve built understands that and doesn’t get lost in defending ‘their turf’. Another risk is making sure leaders are empowered to provide the CEO with honest feedback. No single person in the company will know everything going on, trust, communication and transparency are key.  

Current state of the organization:

• You’re building out a matrixed organization under your new executives
• Meetings: weekly one-on-ones, weekly senior leadership discussions, townhalls
• Founders are focused on growth
• You’re raising your Series B, C or D
• You have analytics in place and a real amount of historical data for comparison
• You’re finally making decisions based on data
• More management brings up questions around career progression
• Your office is likely bursting so a move will happen in this stage
• You know the board and are better at utilizing them as a resource
• You bring executives into board meetings, less is presented by the CEO
• Revisit your mission, vision and values – make sure you stay focused
• You’re likely known in your market or a larger business market, you have a reputation now- make sure you know what it is

Things you’re doing for the first time:

• Creating more robust reporting structures under new executives
• Retitling, especially if early titles were inflated
• Increasing communication to give ‘new folks’ the same access as ‘veterans’
• Raising your Series B, C or beyond, being mindful not to get too far ahead of your valuation as it may limit future round sizes
• Restructuring your team (again) around new management
• Increasing your data infrastructure to help departments make decisions
• Having policies and protections in place to prevent employee security breaches
• Your infrastructure team now has some time to tackle some of the backlog
• Negotiating a new option pool to continue to provide equity to those who are close to vesting
• If you offer meals, figuring out how to feed 100+ people at scale
• Building your sales team to feed the revenue machine
• You’ve recently hired a Head of Product or you will in this stage
• Tools are up for debate as sales, marketing, product and engineering all want something different
• You have recently hired or are hiring a second office manager to keep up
• You’re figuring out how to handle equity grants for employees who leave
• You may have reached sustainable profitability with enough growth capital to continue, figuring out where to invest becomes crucial

What you’ve already solved:

• What the company is solving: stake in the ground
• Key OKRs
• Testing revenue models
• Milestones you’re going to accomplish in the next 6-12 months
• Understanding the largest opportunities and the biggest threats in your market

Software you use:

• Payroll - ADP or TriNet
• Benefits – Private broker
• Accounting – Intaact, Netsuite or a third-party accounting firm
• Google Apps for email and documents
• Dropbox or Box
• Google & Flurry Analytics plus MixPanel or Localytics for data
• Using Hadoop, Redshift and Tableau for data
• You’re starting to build your own data tools
• AWS or your own servers
• Zendesk or Desk for customer support
• Sprout Social or Hootsuite for Social Media
• Jira for Product Management
• Github for permissions & software sharing
• Salesforce CRM for your sales pipelines
• Careers 2.0, Indeed and external recruiters to hire outside of your network
• Stripe and Dwolla for payments
• Skype, BlueJeans, Zoom.us (http://zoom.us/) or Google Hangouts for remote meetings
• Hiring Platform: Lever.co, Greenhouse.io or BambooHR.com

Who you need to know:

• Catering: ZeroCater, Food2Eat (links) or an in-house Kitchensurfing chef
• Recruiting firm for executive hires
• Management training coach
• Lawyers to review equity documents & update the cap table
• Journalists you’ve built relationships with to write-up new features
• Skilled friends who may refer top talent to your company
• Mobile platform gatekeepers to promote you in their stores
• Full time accountant to manage books
• 409a consulting firm to evaluate equity
• Specialists in SEO, SEM, PR, Marketing and Branding

Additional decisions that may start in this stage:

• Having multiple offices or remote employees
• Offering your product in more than 5 languages
• Securing visas for international candidates
• Hiring outside or in-house council, for more regulated industries
• Negotiating a lease on a new office
• Hiring a white hat security firm to run an audit
• Opening an office in a different country
• Accepting foreign currency or cryptocurrency
• Hiring an external CEO candidate

If you have something to add to this list, please share in the comments or send me a line on Twitter.

Next up, the Dunbar Stage, growing a team beyond 150 employees. To subscribe to weekly email updates, sign up here.

Footnotes:

*Please note, this outline is based off of trends I’ve seen in venture-backed startups. It very easily could apply to bootstrapped or non-venture funded companies, but not necessarily. In this outline I assume the company has taken funding.

**We’ve invested in a number of companies mentioned in this note. For a full list, visit our Portfolio Page or find opportunities with them through the USV jobs page.

The most common questions I hear from startup founders and team members is, “What are the best practices? What lessons have others learned? What’s coming next?”

The purpose of the Maturity Framework Series is to help startup founders and employees anticipate what is coming next. This post will specifically look at the Growth Stage, when a company grows from 50 employees to 75.

Company Stages by Number of Employees

Links to full posts detailing the Early Stage, Momentum Stage, and Expansion Stage.

Growth Stage: 50 – 75 employees

You found your market, now it’s time to grow, grow, grow! You have found early momentum, now it’s time to double down. The mistake companies often make at this stage is they see growth as a signal to start a wider land grab. Focus is more important than ever. With more employees, progress and (possibly) money, you’ll be tempted to expand the market you’re serving. This is not the time, build solid ground in what you know. Grow up, not out.

Get your metrics in order. Work off of better data. Build out your leadership team. Worry about getting the right people in the right seats. Stay focused.

Current state of the organization:

• You’ve hired your first executives or experienced managers
• Meetings: weekly one-on-ones, townhalls, monthly hackathons
• Founders are focused on strategic planning and building the right team
• You’re raising your Series B or C
• You have a few years of metrics and you’re starting to run A/B tests
• You’re finally getting your data in order
• More management brings up questions around career progression
• Setting up the HR process- adding an HR coordinator, bringing the team to 2
• Your office space is filling up but likely not time to move in this stage
• You know the board and are better at utilizing them as a resource
• You start to bring team leaders into board meetings
• Revisit your mission, vision and values – make sure you stay focused

Things you’re doing for the first time:

• Hiring Executives, possibly a VP of Product or Head of Sales
• Increasing communication, including better onboarding
• Raising your Series B or C, using more metric-driven forecasts
• Deciding how to recognize great ICs without management promotion
• Structuring your teams around KPIs to align with the company vision
• Increasing your data infrastructure to setup and run tests
• You’re big enough now that a data breach will matter, make sure you have a plan
• Your infrastructure team has finally caught up to keep the platform stable, more forward thinking work can be done
• Thinking about equity for those who are close to vesting and equity incentives
• If you offer lunch, figuring out how to feed 50+ people at scale
• Building your security team, if a marketplace – in community and engineering
• Building out a formalized user testing process
• You’ve recently hired a data lead or will in this stage
• Changing your sprint cycles from 2 week sprints to 6 week epics (with 3 2-week sprints)

What you’ve already solved:

• What the company is solving: stake in the ground
• Key KPIs, or now you’ve changed to calling them OKRs
• Milestones you’re going to accomplish in the next 6-124 months
• *See the Expansion Stage Maturity Map for the complete list for teams less than 50.*

Software you use:

• Payroll - Paychex, ADP or TriNet
• Benefits – TriNet or Zenefits
• Accounting - Intaact, or Netsuite
• Google Apps for email and documents
• Dropbox or Box
• Google & Flurry Analytics plus MixPanel or Localytics for data
• Using Hadoop, Redshift and Tableau for data
• AWS or your own servers
• Mac books
• Zendesk or Desk for customer support
• Sprout Social or Hootsuite for Social Media
• Trello, Asana or Jira for Product Management
• Github for permissions & software sharing
• Highrise, Bases or Sugar CRM for sales pipelines
• Careers 2.0 and Indeed to hire outside of your network
• Stripe or Braintree and Dwolla for payments
• Skype, BlueJeans, Zoom.us or Google Hangouts for remote meetings
• Hiring Platform: Lever.co, Greenhouse.io or BambooHR.com

Who you need to know:

• Catering: ZeroCater, FoodtoEat or an in-house Kitchensurfing chef
• Recruiting firm for hard hires: engineers & VP+ level tech, product talent
• Lawyers to review equity documents & update the cap table
• Journalists you’ve built relationships with to write-up new features
• Skilled friends who may refer top talent to your company
• Mobile platform gatekeepers to promote you in their stores
• Full time accountant to manage books
• 409a consulting firm to evaluate equity
• Specialists in SEO, SEM, Marketing and Branding

Additional decisions that may start in this stage:

• Having multiple offices or remote employees
• Offering your product in more than one language
• Securing visas for international candidates
• Hiring outside or in-house council, for more regulated industries
• Negotiating a lease on a new office
• Hiring a white hat security firm to run an audit
• Opening an office in a different country
• Accepting foreign currency or cryptocurrency

If you have something to add to this list, please share in the comments or send me a line on Twitter.

Next up, the Scale Stage, growing from 75 to 150 employees. To subscribe to weekly updates via email, sign up here.

Footnotes:

*Please note, this outline is based off of trends I’ve seen in venture-backed startups. It very easily could apply to bootstrapped or non-venture funded companies, but not necessarily. In this outline I assume the company has taken funding, whether Seed or Series A

**We’ve invested in a number of companies mentioned in this note. For a full list, visit our Portfolio Page or find opportunities with them through the USV jobs page.

The most common questions I hear from startup founders and team members is, “What are the best practices? What lessons have others learned? What’s coming next?”

The purpose of the Maturity Framework Series is to help startup founders and employees anticipate what is coming next. This post will specifically look at the Expansion stage, when a company grows from 30 employees to 50.

Company Stages by Number of Employees

Links to full posts detailing the Early Stage and Momentum Stage.

Expansion Stage: 30 – 50 employees

You’ve probably been at this for a few years. Only a year ago your company was only in the Early Stage with 10 members of the team. How quickly things change. Your product doesn’t look anything like the MVP. Your customer base has grown 10x from that time. You’ve got all engines firing but there is still so much to get done.

Your team is growing in all directions. Work is getting done that the CEO might not know about. That’s a new thing. Metrics are increasing but it’s harder to pinpoint exactly which person or team shipped that new update, found that bug, or closed the newest clients. You have a team that thrives when they collaborate. You’re on your way to building the organizational side of your business.

The organization needs a leader, now is the time to hire a full time HR or People person. Their role is to setup the people-side of the business for success: hiring, compensation, interviewing, reviews, feedback and resolving any issues. The CEO should still be focused on hiring, but now there is someone to lead the charge.

You likely have a laundry list of other hires you want to make in the next 6 months, having someone fully dedicated to bringing on new talent and making sure to retain the existing talent is crucial. Don’t wait until you have 50 people to manage to hire HR, do it when you are 30 FTE and about to hire 20 more people so they can help onboard, interview, source and grow those people. Hiring an HR manager or promoting someone internally from operations should be your 30^th hire. If you’re not sure what to look for, you can bring on a HR consultant to help you hire a full time HR person. 

At this point, you’ve lost some talent but you are now attracting more applicants. They aren’t all necessary the skill set you need but it’s nice to have talent arriving at your door for a change. There is a brief time period where you believe that it will be easy to fill that next open position. The company is known, you have customers and you have inbound candidates. The unsettling news, the types of hires you want to make now are in a different realm than the one’s you’ve made to date. Things need to change.

Your hiring plan likely includes a VP of Engineering, QA Manager, Head of Marketing, Product leader, HR, DevOps, Engineers, Sales and Mobile. These jobs commonly come up for the first time at a company moving from 30 to 50 FTE. This is new territory for most of your team, what does an excellent QA Manager do, where is the bar set?

Equity and compensation change once again. You quickly realize that if you give 50 people 1% that’s half of the business. You want to attract the best talent but where is the balance to comp and equity compensation? What structures make sense now or will in the future?

Time to step up your hiring game. In order to grow your team, hiring needs to become more of a machine. You can’t ask all of the questions anymore. Instead, you have to make sure the right questions are being asked throughout the rounds of interviews. The right people need to vet new candidates. The bar for new hires should be roughly set, not just a matter of ‘gut’. A process will help save everyone time, it may sound daunting to set up but that’s why you hire someone to run this side of the business. The better your company is at hiring, the easier it will be to expand with customer demand.

Larger teams mean more leadership required. If you have a team larger than 9 people, it should be split into two smaller teams. That means instead of one team leader, you need two. Perhaps you need two team leaders, Engineering Leaders for example, and one functional leader, CTO. There are more layers of management in order for teams to move faster, not slower. The only way to achieve that is by ensuring leaders know what they’re doing.

Hire experienced people leaders. It’s scary to consider hiring someone from outside of your company culture to come in and lead your team. Recruit from companies that have great management training programs like Twitter or GE. Try to instill the culture of management training into your organization.

Adding new hires into management will surface concerns. There will be push back from existing employees that think they would be the best fit for the job or are seeking a title and pay increase given their loyalty to the company. These battles may happen in the open or only exist in whispers among the disgruntled. Be as transparent as possible in your rationale and criteria for people leaders. Don’t cave to the pressure of loud voices at the cost of putting quality management in place. If an existing employee wants to be considered for the role, evaluate them accordingly.

Embrace new people leaders. You’ll promote people from in to fill leadership roles but they may have no idea what they’re doing. Expect that. Build training, seek coaches, find leadership curriculums and use them. Just because a person is talented as an individual contributor (IC), it doesn’t mean they will be great at leading other people in that skill. Plan for it. Coach them through it. If they realize they would rather return to an IC role, consider the growth path for them there.

Most companies revaluate how teams are structured at this stage, not just by adding more leadership, but by dividing up teams. Some structure teams around features, so the team includes one designer, one engineer and one product manager. Others structure teams to revolve around KPIs, so cross-functional teams focused on onboarding vs. retention. Another option is to keep teams split by function, engineering vs. sales vs. design. The setup depends on the company and the people you already have on the team. Team structures will change again when you hit 75+ employees so don’t get too comfortable.

Adding new people to the organization will accelerate the output of the company but not always in the short term. Getting up to speed on how you will construct management teams in order to remove roadblocks will be the biggest priority. It is very easy to add more people and decrease output. Don’t crush your dreams of, ‘if we only had two more mobile engineers we could get this done faster’, by not being prepared to setup the organization correctly.

You will no longer know everyone personally. You won’t have the time or interactions to truly know each person in the company. You can no longer fit your whole team in one meeting at the same time. You should build systems in that can help make sure you’re getting exposure to different parts of the business. One-on-ones with team leaders is a must for CEOs. One-on-ones within teams are a must. Townhalls with everyone present should happen between 15-30 employees, keep those up on a frequent cadence. Provide a tool like Slack, HipChat or Yammer to keep communication lines open.

A clear vision of the future and matching KPIs are required. The company burn has increased with positive metrics, you’re likely in the window to fundraise your Series B or C. Unlike most Seed and Series A fundraises, you have real metrics, historical numbers to compare to and more costs. No longer are things projected purely on speculation, you now have enough of a path to make future forecasts. Putting together the next round of funding will eat into the leadership team’s time and may require additional ad-hoc work from data, design and business teams. The more you can align your weekly metrics with those you’ll use in your pitch process, the easier it will be to streamline.

Opportunity is ahead; make sure on the right path. Growth can mask a lot of management issues. They will likely happen over the coming 6 months, just try to ensure it doesn’t happen in the long term. Over communicate with your team about the reason you’re all here and working so hard. It’s easy to get distracted by job titles, competitors or the quality of the free beverages. Drive home the reason you’re here and working together. Keep the beat of the drum loud and consistent. Your team should be able to recite your mission in their sleep. Don’t shy away from building something together. There are new challenges here but that’s what comes with growth. Make sure to take some time to reflect on how you got here because it’s just the beginning all over again. Appreciate the past behind you and prepare for the path ahead.

Current state of the organization:

• Every employee has weekly 1-on-1s with their leader
• Everyone attends weekly Town Halls
• CEO should be focused on vision and hiring up
• More management and restructuring of teams within sales and product
• You’re raising your Series B or C
• You have a few years of metrics and you’re starting to run A/B tests
• More management brings up questions around career progression
• You have process in some places, like product sprints, but none in hiring or career progression

Things you’re doing for the first time:

• Hiring HR or People Ops
• Setting up a new hire referral bonus program
• You’re big enough now that a data breach will matter, make sure you have a plan.
• Increasing communication: Town Halls, 1-on-1s, and more tech tools
• Raising your Series B or C, using more metric-driven forecasts
• Training new people leaders
• Hiring more management level talent
• Deciding how to recognize great ICs without management promotion
• Structuring your teams around KPIs to align with the company vision
• Setting up an interview process that gets the hires you need
• Negotiating down rates for per-use services like MixPanel & AWS

What you’ve already solved:

• Full Board and observers
• Key KPIs
• Milestones you’re going to accomplish in the next 3 & 12 months
• *See the Early Stage Maturity Map and Momentum Maturity Map for complete lists*

Software you use:

• Payroll - JustWorks, Paychex, ADP or Zenpayroll
• Benefits - JustWorks, or Zenefits
• Accounting - Quickbooks, Intaact, or Netsuite
• Google Apps for email and documents
• Dropbox
• Google & Flurry Analytics plus MixPanel or Localytics for data
• AWS, Digital Ocean or your own servers
• Mac books
• Zendesk or Desk for customer support
• Sprout Social or Hootsuite for Social Media
• Trello, Asana or Jira for Product Management
• Github for permissions & software sharing
• Highrise, Bases or Sugar CRM for sales pipelines
• Careers 2.0 and Indeed to hire outside of your network
• Stripe, Amazon, Dwolla, or PayPal for payments
• Skype or Google Hangouts for remote meetings
• Hiring Platform, like Lever.co, Greenhouse.io or BambooHR.com

Who you need to know:

• Recruiting firm for hard hires: engineers & VP+ level tech, product talent
• Real estate broker for your new or next office
• Architect or interior designer for office setup
• Lawyers to review equity documents and to negotiate contracts
• Journalists you’ve built relationships with to write-up new features
• Skilled friends who may refer top talent to your company
• Mobile platform gatekeepers to promote you in their stores
• Full time accountant to manage books
• 409a consulting firm to evaluate equity

Additional decisions that may start in this stage:

• Having multiple offices or remote employees
• Offering your product in more than one language
• Securing visas for international candidates
• Hiring outside or in-house council, for more regulated industries
• Negotiating a lease on a new office
• Hiring a white hat security firm to run an audit

If you have something to add to this list, please share in the comments or send me a line on Twitter.

Next up, the Growth Stage, growing from 50 to 75 employees. To subscribe to weekly updates via email, sign up here.

Footnotes:

*Please note, this outline is based off of trends I’ve seen in venture-backed startups. It very easily could apply to bootstrapped or non-venture funded companies, but not necessarily. In this outline I assume the company has taken funding, whether Seed or Series A

**We’ve invested in a number of companies mentioned in this note. For a full list, visit our Portfolio Page or find opportunities with them through the USV jobs page.

As part of the Maturity Framework Series, today we’ll look at the Momentum stage, for companies with teams of 15-30 employees. Here’s what companies at this size are thinking about*.  

Company Maturity Map by number of employees

You can learn more about the Early Stage here.

Momentum Stage: 15 - 30 employees

Your product feels more real than ever before. You have customers using your product, suggesting features, and needing help canceling. So goes the rhythm of a company with momentum. You have money in the bank but are working to find that balance on how fast or slow to spend. You’ve heard not to be ‘penny-wise and pound foolish’ but what does that really mean? VCs invested growth capital, not stay the same capital. It’s time to grow the team beyond the 15 loyal team members who got you this far.

You’ve either found product market fit or are continuing to grow but not exactly how you expected. The previous months of product and customer development help determine who should be hired next. You may be adding more to your engineering team, sales team or community team. Wherever there feels like the biggest opportunity for growth is where you’re staffing up. However, these next hires aren’t exactly the same as the ones you made to get to 10 FTE.

You may finally convince that former colleague from Twitter, Google, Facebook, Samsung, Apple or (insert large tech brand here) to join your team. The hires bringing more experience in a particular area. They have war stories, set processes and advice that sounds very similar to, “When I was at Twitter, this is how we approached building our sales process from scratch.” They have higher salary expectations and will bring more authority than your founder may be used to. The advice “hire people smarter than you” works, but it’s a shift away from the way things have always been done.

Bringing on more specialized talent doesn’t necessarily mean their role on the team will be 100% what their title entails. The VP of Engineering may be managing your team of 7 engineers but they may also be required to ship code 50% of the time. The Head of Sales may be working alongside 2 other sales people but feels more like an individual contributor than a full time manager. Making these hires is an investment in the future team as you’ll need more leaders before you know it. Amazon’s two-pizza rule is popular for a reason, having more than 8 people on one team is too many. If you get to 9 engineers, divide into two smaller engineering teams.

The move up to 30 employees may take a long time as some people will move on as new hires are hired up. The more specialized hires will work alongside your existing team but may scare a few early team members away. The early employees may feel like things are ‘changing’ or becoming ‘too big’. Don’t fight those people who leave. Anticipate it, acknowledge it to your team: Where we are is not where we started, where we’re going will bring more change too. Those who are excited about the future are welcome. Those who are looking to move on, we wish them well.

Teams that grow to 30 will expand the types of roles that are required. At fifteen employees you will likely need to hire an office manager if you haven’t yet. Having someone fully dedicated to making sure the office has everything it needs to be productive becomes a priority. In the early days, even the CEO would run out to refill handsoap, TP or pick up lunch. Now there are deadlines and products to be built, making sure there is a productive environment for the team to succeed is not an after thought. The office manager at this size often have a secondary role in the company too.  They may also serve as a temporary executive assistant, QA manager, community manager or HR coordinator. As the team grows to fill those roles, the office manager role will expand to serve the larger company too.

Having the CEO interview every potential candidate may get unwieldy. It’s good for the CEO to agree on new hires, as it should be her top priority, but it’ll become challenging to schedule time with potential candidates, 1-on-1s with existing employees and leave head space for leading the company. It’s best to get to work on a strong interviewing process, even if just a few steps in a google doc, to make sure top candidates get through and mediocre candidates don’t take more time than they’re worth.

You’re still at the point where it’s easy to remember everyone’s name on the team. You may need to change your old policy, everyone in the company going out to lunch with a new employee, to ordering lunch in for everyone as restaurants don’t seat 20+.

Each new hire brings something new to the table, you’re expanding the expertise of your team to become the company you’re all working so hard for. More people with diverse backgrounds brings more conflict. That difference in opinions and experiences is what helps drive the business forward, but it’s something to make sure is propelling the team forward, not sideways.

Over communicating is essential as this stage, it’ll feel like work, it’ll feel like too much but it’s necessary to help keep the team on the same page. Gone are the days where you could all give updates in a daily stand-up. You need to protect peoples time but make sure they understand the message. You should have a weekly Townhall meeting to keep the company up to date on where the company is, what everyone is working on, and the vision of the company (repeat it every week). This drumbeat is essential, especially as the company grows. Make sure to share news, good and bad. If you only show numbers that are positive or always increasing, you’ll build a culture afraid to fail or terrified if you miss goals. Find the balance of transparency at this stage.

When you continue your focus on the team communicating, make sure multiple voices are being heard. Be mindful that a culture that only recognizes the ‘old guard’, or early employees, is demotivating for new employees. Equally, the leadership of your company may need to make themselves more available to new employees. It’s easy for an early employee to walk up to the CEO and ask a question, something they did in the early days, but more intimidating for someone who just started. There are invisible barriers that new employees try not to violate, as a leader, make sure you are creating equal access to your time.

Be the place you want to work. You are building this thing together. There will be great successes and big mistakes. Cherish these, celebrate these because this is the culture you are going to bring with you for the next year. If you think there are people in the company at odds with the growth, don’t be afraid to let them go, they will bring down other team members too. It’s important that there is alliance in where you are all heading together. Having a team of thirty will feel like a big group, but it’s a stepping stone to where you will soon be. Don’t let looking backward to how things were keep you from moving the company forward. You’ve got a lot of ground to cover. Your team is all here for the right reasons, help remove any barriers preventing them from doing their best work.

Current state of the organization:

• Everyone attends a weekly Town Hall to learn what’s going on.
• Founder should be focused on vision and hiring up.
• More specialization in new hires, little or no management hierarchy.
• You’re building expanding sales, engineering or support teams based on company demands.
• You have consistent customers and start to see your first churn.
• More perspectives in the company mean more disagreements.
• You may see company culture become more dominated by sales or engineering depending on your business.

Things you’re doing for the first time:

• Figuring out role requirements for the new roles
• Hiring an Office Manager
• Moving away from the CEO interviewing every potential candidate
• Increasing communication: Town Halls and more tech tools
• Keeping an eye that ‘first hires’ and ‘new hires’ are working together
• Involving your investors in quarterly strategy discussions
• Creating meaningful data dashboards to update weekly
• Hiring more experts instead of just generalists
• Increasing the size of your support or community to scale with customer growth
• Deciding on titles for new and existing hires
• Right sizing equity and compensation for more experts
• Nailing down your KPIs to align with the company vision
• Conducting a refresh of your company Mission, Vision & Values
• Managing team morale when things don’t go as planned
• Setting team expectations that some employees may leave
• Trying to manage low performers or firing any bad hires

What you’ve already solved:

• Investors and immediate runway
• Filled 80% if not more of the board seats
• Working location: new office or sublet
• Technology stack - dominant language
• Mobile platform roll-out schedule
• Milestones you’re going to accomplish in the next 3 & 12 months
• *For the full list, see the Early Stage Maturity Map*

Software you use:

• Payroll - JustWorks, Paychex, ADP or Zenpayroll
• Benefits - JustWorks, or Zenefits
• Accounting - Quickbooks, Intaact, or Netsuite
• Google Apps for email and documents
• Dropbox
• Google Analytics plus MixPanel or Localytics for data
• Flurry Analytics plus Localytics for mobile
• AWS, Digital Ocean or your own servers
• Mac books (possibly through business financing)
• Zendesk or Desk for customer support
• Sprout Social or Hootsuite for Social Media
• Sticky notes on a wall, Trello, Asana or Jira for Product Management
• Permissions & software sharing: Github
• Highrise, Bases, Sugar CRM or PipeDrive for sales pipelines
• Careers 2.0 and Indeed to hire outside of your network
• If accepting payments, Stripe, Amazon, Dwolla, or PayPal
• Skype or Google Hangouts for remote meetings

Who you need to know:

• Real estate broker for your new or next office
• Architect or interior designer for office setup
• Lawyers to review equity documents and to negotiate contracts
• Local meetup attendees to recruit new talent
• Influencers on blogs, at hackathons or at events who will promote you
• Journalists, via Twitter or friend-of-a-friend, to write-up new features
• Skilled friends who may be willing to leave for a ‘startup job’
• Mobile platform gatekeepers who will provide feedback on your app
• Part-time accountant to manage the company books
• Recruiting agencies that can help with hard to find hires

Additional decisions that may start in this stage:

• Having multiple offices or remote employees
• Offering your product in more than one language
• Securing visas for international candidates
• Hiring outside or in-house council, for more regulated industries
• Negotiating a lease on a new office
• Hiring a part-time HR manager or full-time recruiter

If you have something to add to this list, please share in the comments or send me a line on Twitter.

Next up, the Expansion Stage, going from 30 to 50 employees. To subscribe to updates via email, sign up here.

Footnotes:

*Please note, this outline is based off of trends I’ve seen in venture-backed startups. It very easily could apply to bootstrapped or non-venture funded companies, but not necessarily. In this outline I assume the company has taken funding, whether Seed, Series A or B.

**We’ve invested in a number of companies mentioned in this note. For a full list, visit our Portfolio Page or find opportunities with them through the USV jobs page.

As part of the Maturity Framework Series, I wanted to map out a few basic things a startup that is growing from 2 to 15 employees should be thinking about as they grow. We’ll start with taking a look at what should already be ‘figured out’ by the time you reach 15 employees. 

Based on the past 2 years of Series A investments, companies at this level usually have team sized between 5 and 15 people. In this outline I assume the company has taken funding, whether Seed or Series A*. 

Company Maturity Map by number of employees

Early Stage: 15 employees or less

You’ve been at this for a year or two and you’ve finally made some traction. Your first mobile app is in market, you have a few thousand customers visiting your website or you just closed your first two deals with big businesses. You’re seeing initial traction and you’re moving as fast as you can to keep the firing burning.

Very few people who work in your company are 'domain experts’. Some came with little experience and a lot enthusiasm to build something new. Others were overworked at a previous job with little personal meaning, so took a pay cut for the chance to build something that excites them. The skill sets people walk in the door with aren’t necessarily what they are working on. Former lawyers are now operations managers, musicians are managing the community, salesmen are making hires, and that former VP of Engineering is now a full-stack hacker. Everyone is doing a little bit of everything, no one is only doing one thing.

The team fits around one table and if you need to talk to someone you just turn around and tap them on the shoulder. You don’t need to over-engineer systems to share information because everyone can overhear every meeting in the small office. Even the CEOs phone calls with investors are heard through thin walls and headphones.

You may have some of the best engineers but there’s a lot of ground to cover. You find out about bugs in your code from your friends who are using the 'beta’ or getting a tweet from someone trying to login. The site was down for 30 minutes and you just realized there was an error in that last push. Everyone jumps in to help out. Someone is reviewing the log files. Another engineer is pushing code. One of the co-founders is testing the website on 3 different browsers to ensure the bug was fully fixed. The CEO is reaching out via Twitter to thank the customers and assure them the site will be back up soon. 

This group of friends and new faces are building something that is bigger than what they imagined at this size, but still feels like a speck compared to the other 'startups’ out there. It’s exciting and chaotic but you wouldn’t want it any other way. 

Current state of the organization: 

• Everyone in the company knows everything going on. 
• Founder or founders are usually doing a lot of different things.
• No specialization, anyone can, and does, do anything.
• You’re building out an idea, not necessarily a company yet.
• You’ve pushed a real product to real customers (not just friends).

Things you’re doing for the first time: 

• Figuring out role requirements for the next set of hires
• Learning the nuances of interviewing
• Deciding if you’re open to 'remote teams’
• Defining your 'vacation policy’
• Adding “Terms of Service” to your product
• Putting together a board deck
• Setting up one-on-one meetings between Execs & team
• Having regular meetings with the whole team
• Right sizing equity and compensation
• Deciding on Security of employee equipment (2-factor auth)
• Figuring out what type of coffee machine to have at the office

What you’ve already solved: 

• Investors and immediate runway
• Founders: who they are and what they do
• Domain name, company name, vision
• Filled 60% if not more of the board seats
• Company structure: likely a C-Corp or B-CORP
• Working location: office or coworking space
• Business banking - a professional account, not a personal one
• Technology stack - dominant language
• Milestones you’re going to accomplish in the next 3 months

Software you use: 

• Payroll - JustWorks, Paychex, ADP or Zenpayroll
• Benefits - JustWorks, or Zenefits
• Accounting - Quickbooks, Intaact, or Netsuite
• Google Apps for email and documents
• Dropbox if not Google Drive
• Google Analytics for web (free tier)
• Flurry Analytics for mobile (free tier)
• AWS or at the verge of outgrowing Heroku
• Mac books (possibly through business financing)
• Zendesk or Desk for customer support
• Social media is manageable so no tools
• Sticky notes on a wall, Trello or Asana for Product Management
• Permissions & software sharing: Github
• Careers 2.0 and Indeed to hire outside of your network
• If accepting payments, Amazon, Dwolla, or PayPal

Who you need to know: 

• Local co-working spaces to house your growing team
• Real estate connections for your next office
• Lawyers to get your documents in order
• Local meetup organizers who will let you demo at the next event
• Journalists, via Twitter or friend-of-a-friend, to write-up new features
• Skilled friends who may be looking for a 'startup job’

Additional decisions that may start in this stage: 

• Having multiple offices or remote employees
• Hiring outside or in-house council, for more regulated industries
• Negotiating a lease on a new office

If you have something to add to this list, please share in the comments or send me a line on Twitter. 

Next up, the Momentum Stage, going from 15 to 30 employees. To subscribe to updates via email, sign up here.

Footnotes:
*Please note, this outline is based off of trends I’ve seen in venture-backed startups. It very easily could apply to bootstrapped or non-venture funded companies, but not necessarily.

**We’ve invested in a number of companies mentioned in this note. For a full list, visit our Portfolio Page or find opportunities with them through the USV jobs page.

See the wall. Scale the wall. See the next wall.

After working with 52 companies at various stages of growth, building a small team in Chicago, and talking with startups of all sizes, I’ve seen a clear pattern of organizational maturity emerge.

I wanted to share some of my findings and continue to map out the patterns of organizational maturity in order to better serve entrepreneurs facing those challenges. 

For example, Drew Houston, Dropbox CEO, describes it as scaling walls: 

“If you’ve never started a company, or worked at a smaller company, you’ll run into a vertical learning curve, Houston says. There’s no way to know everything you need to from the start, so you need to a) gain as much knowledge as you can as fast as you can, and b) plan ahead to learn what you’ll need months down the line. You have to be prepared for a never-ending conveyor belt of challenges.

‘You have to adopt a mindset that says, ‘Okay, in three months, I’ll need to know all this stuff, and then in six months there’s going to be a whole other set of things to know — again in a year, in five years.’ The tools will change, the knowledge will change, the worries will change.’” Article Link

The good news for entrepreneurs and their teams is that by studying multiple companies at once, it’s possible to better set expectations of what’s coming next, what others have done at their transition, and how to anticipate or avoid the biggest mistakes.

Patterns in Hyper-growth Organizations

We’re going to look at the framework for growth. The goal is to innovate on that growth. In terms of methods, the companies I’ve explored are high-growth, technology-driven and venture-backed organizations. They experience growth and hyper-growth (doubling in size in under 9 months) frequently due to network effects, taking on investment capital, and tapping into a global customer base.

Every company hits organizational break-points. I’ve seen these happening at the following organizational sizes:

• Early : Under 15 employees
• Momentum: 15- 30 employees
• Expansion: 30 - 50 employees
• Growth: 50 - 75 employees
• Scale: 75- 150 employees
• Dunbar: 150+ employees

Revenue, amount of capital raised, type of company, size of audience, product maturity and other factors vary among all of these companies, but the challenges they face at the different organizational sizes are the same.

I plan to dive a little deeper into each Growth Stage in a series of blog posts over the coming week. I’ll cover what new challenges arrive, what pieces of the organization a company should already have figured out, and what decisions should be held off on at that point.

I hope to share some of the things I wish I knew when I was an entrepreneur. And hey, it may help alleviate that feeling that you’re the only one scaling those walls.

Solving Challenges at Scale: 

At USV, my goal is to test which methods work best for sharing these best practices and delivering information right when a team might need it. Most of the work is still in progress, so let me know if you’ve been doing any research in this area. 

I’ve leveraged a lot of knowledge around networks, as the framework for how we deliver this knowledge:

Source: Why Being The Most Connected Is a Vanity Metric

Instead of building a centralized method to deliver knowledge, the USV Network uses knowledge across the network to share best practices. The next challenge is how to leverage that network to provide advice and guidance before it’s even requested. 

For example, if a company has 15 employees and plans to hire to 30 in the next 6 months, helping provide knowledge that they’ll likely need to hire an office manager or they might need to consider more advanced payroll and insurance tools for employees. The team member feels comfortable asking their peers for advice on existing problems, but doesn’t have an easy way to anticipate the challenges ahead. 

Connecting peers at all levels helps surface some of these topics but I think we can take it further. The holy grail would be a resource that anticipated what the company needed in advance and helped educated them along the way so they would have the information they needed when they were ready to make the decision. 

It’s not ready yet but it’s in the works. If you have thoughts on things that have worked for you, please let me know in the comments or on Twitter. 

In startups, we often hear “X for Y” in terms of business model, “Airbnb for backyards” or “Duolingo for Music”, but it’s also common for market locations. Examples include, “The Knot in the Middle East” or “Amazon for Australia”. Great businesses in the US haven’t spread everywhere, and sometimes for good reason. The market may not be big enough to make sense. 

Australia, for example, has 23 million people. It’s a large country but population-wise, it’s dwarfed by neighbors like Japan with 125 million people. And even though there are large populations there, it may not make sense that the market demand there are the same as market demand there. 

Understanding the size of the pie first is important, especially when thinking about raising venture capital. It’s very easy to think: I want this product so everyone will too. It’s worth doing some quick analysis of what that pie looks like to avoid the “someone like me” problem.

Potential Customers matter

I’m a New Yorker, 8.3M other people belong to that group too, but that’s only .1% of the 7.14B on this planet.  

Well, being a New Yorker means I’m also an Urban Dweller, which makes me part of the 50% of the population (as of 2010) that lives in a city. And that number is increasing. So maybe catering to city dwellers, not just New Yorkers is a big pie. 

That pie is big by population, but not necessarily by potential customers for your product.

Around 1.29 billion people (18.4% of the world population) live in extreme poverty, subsisting on less than US$1.25 per day; approximately 870 million people (12.25%) are undernourished. 83% of the world’s over-15s are considered literate. In June 2012, there were around 2.4 billion global Internet users, constituting 34.2% of the world population.^{(Source: Wikipdedia)}

There are big problems for big populations of people. Those are pies worth thinking about. If your mission is to serve 10% of all internet users, that’s roughly 244 million people. That’s a big pie to shoot for, but it may be spread across different countries with different languages. 

What other requirements about your product need to be true? Do customers need to speak English? Be a tech early adopter? Have a smart phone? Travel? College educated? Parent? Tech savvy? Know your market. 

Spending matters

If you want to serve every mother living in New York City that makes over $100,000, that’s a smaller pie but maybe a bigger opportunity to sell a higher priced product. 

Margins matter

You could build a big business selling 100M widgets with a $1 profit on each. Or you could sell 1M widgets with a $100 profit margin on each. What the market will allow matters, think about the margins and how they will change over time. It’s easy to sell a $5 coffee when you’re the only game in town, but what happens when competition moves in and you need to cut prices to maintain sales? Goodbye margin or hello decrease in customers. You could do either, but you’ll want to think about that before you start. 

Even large, well funded companies sometimes choose to give up their own margins to drive more business. Sometimes they do this because they have the volume to maintain a profit, or sometimes they do it to squeeze their competition, driving competitors to cut prices too.

Pie ownership matters

Is this a winner take all market? Could many companies build big businesses in this space?

Walmart, Target, and local convenience stores co-exist. Walmart and Target have built massive businesses, they each own enough of a very large pie. It’s a massive market, so it doesn’t matter that they aren’t the only owners of the pie. Not winner take all, two winners take most. 

Android and Apple are winner take most in operating systems. It’s a slightly different story in handsets, it’s Apple, Samsung, Nexus and a number of manufacturers competing for share, especially in the US. 

For a good read on the US Brewery industry only having room for 3, not 4 big players, read ‘How to Blow $9 Billion: The Fallen Stroh Family’. 

Big businesses can be built without venture capital

The majority of businesses are not venture backed. There are a number, especially those recently making their way to the public markets, but that doesn’t mean every business needs to shoot for venture funding. 

If there is a big pie that could benefit from a large amount of growth capital, that’s worth discussing. If it’s a business that can grow on it’s own revenues, that’s a great way to get there too.

If you look at the big picture, you can own 100% of your business, take 1% share of your market and build a $100M business. You could also own 10% of your business, take 10% share of your market and build the same $100M business. The goal would be to take 10% of a market that pushes your business to $1B+.

Go with the market

Markets move quickly, but if you understand the ceiling, it’s easier to be realistic about how to get to 1% of the pie and grow it from there. 

A superior leader is a person who can bring ordinary people together to achieve extraordinary results. Remember this if you are lucky enough to manage a team. 

- 8 Wharton MBA lessons that stood the test of time

Part of scaling as a leader is knowing where you belong.

First you belong at the top, you have the vision and the skills to get things started. You hold the information and spread it down within a small team. The team is flat and they all look to you for what’s next. 

Then, the grass roots begin. You have to evolve so that you’re highlighting other people. Sharing their strengths. You are still the keeper of the vision but you lead by showing the work of others not your own. Expertise bubbles up, not just a trickle from the top.

Next, you have area expertise, whether it’s marketing, technology, design or data, but are slowly building a team of better experts around you. They may be better than you at the skill that you’re leading them in. That’s what you want. The real way you lead is from way behind. The message is shared through the experts, let them share with the company what’s going on, what’s worked, and what is up next. You lead the vision but it’s told through the people building towards it. Leadership is spreading up and down. 

Then you become a leader of people who are leading teams. You’re leading leaders. You are less into the mechanics and more on the showroom floor. Leading with the vision and passing off the vision to the leaders in your company to lead their teams. Everyone has ownership and is expected to lead, title or not.

In order to grow a company, you have to change along the way. There aren’t hard and fast rule to when things change, but it can work out better to move onto the next step earlier rather than later. You have to work to be better at letting others lead.

It won’t be like it used to be, but that’s not where you wanted to stay, now is it? 

Working with the USV portfolio means I get to meet a lot of outstanding candidates looking to join one of our portfolio companies. Here are a few characteristics I’ve found to distinguish the great candidates: 

Curious
You need to be curious to create things that never existed. You don’t necessarily have to be curious about something related to the job you’re taking on, but you have to have curiosity for something.

What do you love? If you can’t think of anything, it will be hard to build a product out of love. You have to understand it to get better at building it.

If I hear about a great new app, I immediately download it to check it out. This leads to two outcomes: discovery of a great app that I will continue to use for a long period of time that slowly creeps closer to my home screen or an orphaned app that was opened one time and then filed out of the way until I need more space and delete it. 

According to Fortune Tech, I’m not alone. 

“The rate at which web users consume and discard new apps is accelerating. Proof of that is clear: Chatroulette was popular for around nine months before users lost interest in its often-lewd content. Turntable.fm, which exploded in the summer of 2011, peaked that fall before people tired of its novelty interface. It was popular for long enough to raise $7 million in venture funding before finally shutting down late last year. Draw Something, a game which took off in early 2012, climbed the App Store rankings for just six weeks before Zynga (ZNGA) acquired its parent company, OMGPop, for $200 million. Almost immediately after the deal, the app began losing users. Recent viral hits which the jury is still out on include Snapchat, Vine, and Frontback, a photo-sharing app which gained traction over the summer but has been quiet since. The moral is: The majority of viral apps and companies have ended up as losers." 

- How long can you keep a Secret? - Fortune Tech

On my desktop it’s very different. I can save applications or files in what seems like infinite space, so there is less need to discard things often. 

Phone capacity has a different constraint than the web never had. Not only from the development standpoint of the libraries you can ship into app stores for approval, but for the storage footprint on the phone. I’ve take advantage of Dropbox’s mobile sync features for photos but I still feel like space is precious on my phone more so than on my laptop.

I’ve never been a fan of iCloud, perhaps because of my existing membership to Dropbox or early sour experience with ‘sync’ through iTunes, but that’s the supposed promise. Endless space, but the price can get hefty to hang onto useless data if you’re paying per GB per month. 

If iCloud were free and unlimited, what would change? What would you have on your phone if space weren’t a constraint?

When I visited Budapest and Berlin I had two data heavy apps that kept data cached locally. It worked great while on the move but was dumped when I got back to make room for new apps with unknown utility. 

With the web, we were always restricted on speed of information but not limited in which webpages we could visit based on their data needs to run properly. Data was free as long as you had a connection.

With mobile, data hoarding is taxed. If you want to visit 100 different apps, that all need to be downloaded locally for performance, you either need to pay up or narrow down your choices. Only the best apps last, but what makes an app worth keeping? 

There will always be space in my phone for utilities: Mail, Kik messenger, DuckDuckGo, Duolingo, Meetup, Sonos. The places I go to transact on a regular basis.

With entertainment apps, I think I’ve been more fickle. Most entertainment apps expect you to put time, content and energy into them but give nothing back. You don’t gain anything from using them. All of the drawings in DrawQuest go there to disappear. Snapchat too. Twitter updates are quickly swept away in the feed. It’s sizzle then burn. Some of these apps were built to avoid the data storage tax, to keep their footprints small on purpose. It’s a feature, not a bug, but how long can they really stick around if they don’t create any lasting value over time?

I could feed DrawQuest, SnapChat and 2048 for 6 months straight and have nothing to look back on. Nothing to show for the time spent.  Just an app that looks exactly the same as the first day I downloaded it. So switching costs to a new entertainment app are easier. 

If more apps were built to progress you over time, maybe their life as a top app wouldn’t fade so quickly. Even CandyCrush had lasting impact because you lose all forward progress if you delete the app. It may be challenging for a UGC app to build that progress over time when it would require more data on the users phone. Those committed would have to give up storage from something else to get there. 

How different would the app ecosystem look if phones had 1TB drives and apps could ship up to 1GB of data? Would apps still go viral and fade? Would we hoard more? Or would we just wait longer for our apps to download? 

[Props: Article originally found via Timoni who speaks to the impact young users have on driving popularity but not sticking around. Then commented on by Rickwebb who takes a look at the parallels of Hollywood’s Studio model to Facebook’s app constellations.]

(Mailboxes for 20 at a downtown Hacker House. Thanks for the warm welcome Adrienne.)

At 8:30am on Market Street or Mission, you’ll see a number of people hurrying into buildings but no coffee carts selling $2 steaming cups or donuts on display. No line around the block for Starbucks or Dunkin Donuts. The commuters are on their way, unencumbered with hot coffee or an almond croissant. Why would they stop outside when there are baristas brewing Blue Bottle 30 feet from their desk, and at no cost to them? How could a cart or a deli survive when competing with free food and drinks within reach of these hard working (and well paid) Internet workers? 

Lots of community in SF is locked inside. Twitter HQ is contained within a tall building in the middle of Market Street. Facebook has a campus accessible only by car or bus. Even smaller companies are holed up in offices away from street view. From the outside, you would never know there were so many builders inside.

Visiting from New York City, a place that often requires dodging people on sidewalks or hurrying to nab the last empty bench in the park, it feels desolate. Even the neighborhoods at 7pm have stillness about them. This is not a city without people, it’s just they convene out of view.

Campus living

On Tuesday night, I attended an event at one of the Campus houses, a hacker townhouse with 20 bedrooms, two kitchens and a sizable patio. Walking up, I wasn’t sure what to expect. It was a nondescript townhouse on a quiet street. No signs from the outside. No open windows with talk wafting into the streets. I was buzzed in and immediately immersed in a bustling community of people talking, eating, and sharing inside. There were 30+ pairs of shoes by the door and numbered mailboxes in the entryway. Behind one front door was an entire neighborhood of creatives, builders and entrepreneurs.

As rent increases and demand outpaces supply for rentals, community living makes sense. The campus rent is around $1000 per room month, reasonable for a place downtown.

Cheap rent isn’t the only upside. A drone entrepreneur, living in a different hacker house, told me about the freedom community living gave him. He lived in SF for over a year but never in a permanent place. He floated from hacker houses to Airbnbs for weeks at a time. He said he kept few possessions, expect for a motorcycle. It enabled him to move on quickly and to commute from anywhere without the concern of available public transpiration. If he decided he wanted to move across town or to another city, he could decide on a whim. Own nothing, just float.

I could relate this this. I’ve done this myself as a sublet in NYC, Chicago and LA for a few months at a time, just brought a suitcase and found a sublet with furniture included. It helped me decide whether I wanted to choose that neighborhood or another. The difference was, the maximum number of roommates I’ve had at one time is 3 people, not 23. I had acquaintances at each place, not a built in community.

New York City Commons

In New York City, if I wanted to spend time with 23 friends at one time, we’d have to meet at a park, a bar or an office space that had the luxury of all of that room. Small common spaces within NYC apartments (or at least the ones $1000/per month could buy you) limit the amount of community that can be contained behind closed doors. Our personal communities spill onto the streets and public places.

Even office culture can be seen buzzing outside throughout the day. Few companies offer free cafeterias, so entrepreneurs have taken it upon themselves to develop in the commons. More restaurants, food trucks and pop-up street food vendors arrive around business districts. Even small shops that survive on delivery are apparent with delivery bikes momentarily chained up outside office high rises. More demand, more supply is created that benefits everyone who lives in that area.

Businesses are building behind computer screens but their people are fueled by the buzzing city outside their company walls. The ecosystem is easy to see from any street corner.

High Quantity Collisions

Zappos’ CEO Tony Hseih believes “the best things happen when people are running into each other and sharing ideas.” That’s where the ideas live, in people living within the same space. So much so that he’s built all of the Downtown Project on this vision, maximize collisions and accelerate serendipity. More creativity happens between diverse perspectives than in unified ones. To get involved, just start spending time in Downtown Las Vegas, the community is visible in desert daylight.

There is more of a closed commons culture in SF. The mechanism for people being together is there but it’s in protected communities. Like Twitter’s cafeterias, coffee bars and common work spaces or Apple’s mandate of only one set of bathrooms in the center, in order to encouraged people to make eye-contact and make things happen – these are taking the idea of the commons into private networks. Only Twitter employees or Apple employees will be part of that commons. Everything outside of those walls, stays outside.   

Open Circuit v Closed Circuit Collisions

Collisions are a good thing, but should they happen in a closed circuit? If you take a private car or bus to your office, eat breakfast, lunch and dinner inside, and only walk from your office door to your private transportation out, are you part of that city? You may spend more time with colleagues but is that enough to create more meaningful creative collisions? Should only company employees collide or should there be more invested in the commons like in Las Vegas & NYC? I think the former may be great in the short term, but the latter is a way to help develop great cities in the long term. 

Maybe we should have more hacker houses in New York City to help new creatives float in, even just for a little while.  In San Francisco, maybe there should be more public, street-level coffee shops supported by big company employees (even if employees drink free). Giving back to city commons helps the whole city rise. 

(Thanks to RunofPlay for the image, with timely football theme.)

The single most important thing to the USV Network is the people who comprise the 50+ companies.There is so much value built within a single team that is only further amplified when those teams get to work with peers one degree away. The knowledge base expands beyond just USV companies because each person in the network brings the expertise from their current company and every company they’ve worked at prior.

We got a snapshot into Amazon’s ‘Bar Raiser’ method during a discussion on hiring great product managers. Thanks to Douglas Hwang, Product Manager at Etsy, who shared a few insights from his time at Amazon. [Disclaimer: These are my notes from the discussion–not straight from the source.]

A core requirement of the Bar Raiser method seems to require internalizing this core idea:

“It is better to accidentally say no to good people than accidentally say yes to bad people.”

Now, this seems easy in principle, but can come under a lot of pressure in a fast growing company. You need an iOS engineer yesterday and your current team is already working through the weekends. Yes, Jason Fried’s Rework said “Hire when it hurts”, but this is beyond that. No, this is still not a good reason to hire an okay candidate.

Let’s look at it this way, hiring a bad candidate comes at a huge cost and hiring the best candidate is the least cost. So what resources are wasted?

• Money: compensation, new setup of accounts, desk space, equipment, free lunches, etc.
• Time: HR’s time on-boarding, interviewers time, team’s time getting them up to speed, manager’s time of training.
• Morale: Team’s disappointment, lowering the bar of quality, loss of faith it will get done.

Now all of these aren’t deal-breakers, as you grow, you will make bad hires. But the hit to resources will need to be compensated in other ways so just realize you’ll need to overcompensate for morale after a bad hire leaves.

The bar raiser method helps your team be more efficient at the top of funnel (candidates coming in) so that less time gets wasted with bringing on weaker hires. 

The hiring process at Amazon can consist up to (and sometimes more) of 7 interviews conducted by 7 different people, with two key decision makers. The first is the Hiring Manager;  she will be adding this candidate to her team so she is ultimately responsible for evaluating the candidate for their ability to get the work done. The second key decision maker is the Bar Raiser; who is from a different team and won’t be working directly with the candidate but is responsible for making sure “this person is raising the talent bar at Amazon.” Both decision makers must say ‘yes’ for a candidate to get hired.

The Bar Raiser has an important stake in bringing up the level of talent at the company, which removes a hiring manager’s bias to move quickly to fill a role directly on their team. This method may eliminate candidates who were a fit for the role but wouldn’t find a long-term home in the company.

Does your company have a set method it uses for more efficient hiring?

I’m interested to learn more of what’s worked or hasn’t and at what company size. 

The day the Amazon Fire phone came out I just finished “The Everything Store” by Brad Stone. In the last chapter Stone mentions that a phone may be next for Amazon, perhaps even before the book is published. It took a bit longer than that for the phone but it got me thinking about the static nature of books, especially non-fiction. 

We’ve moved into this wave of building and collaboration. Yesterday, I wrote about the rise of collaboration KPIs and some of it’s challenges. Today, it’s thinking about how collaboration as a product could move forward or significantly alter some of the industries that haven’t been exposed to it yet. The first one I’d like to take a look at are books. 

When thinking about the shifts in social and mobile, there are a few trends that have emerged: 

Social v1 : Relationships online
Connecting people to people around content.

• Facebook
• LinkedIn
• Twitter
• Kik (more of a utility but social v1)

Social v2 : Publish to the people
Connecting people creating content to people consuming it. 

• Soundcloud (music)
• Wattpad (stories)
• Tumblr (blog)
• Youtube (video)

Social v3 : Build together
Connecting people creating content to people creating content.

• Splice (music)
• GitHub (code)
• Medium (blog posts)
• Google docs (documents and worksheets)

Social Books: Getting content into the community

Most publishers have only used Social v1, having other people spread the word about their books, as their entrance into social. They don’t do much to socialize a lot of the content inside of the book. 

Kindle has tried to build in sharing features within it’s digital books but it’s still a closed platform. I think they’ve missed the mark on making a book truly social. It’s not easy to share a snippet of a book with your community. The content is locked up, which means people hack around the system: taking screenshots, retyping portions of the book or going through their Amazon Kindle account online to see what they highlighted. There is too much friction to share. 

Super Books: Having the community contribute content back

And sharing isn’t just a one way street, that also means those books don’t link out to provide the reader more context about what they’re reading. If you wanted to learn more about a historical event or see a map, you’d have to leave the digital book to find out. There seems like a large opportunity to have the book readers provide links back into the book that make the reading experience greater. Just like Wikipedia allows contributions to make media rich pages. 

They also haven’t leveraged the opportunities in Social v2, having authors closely connect with the readers. Wattpad, though more focused on stories than books gets this. Writers publish stories to Wattpad, sometimes even once a week, so that they can connect directly with their readers. Readers can then give instant feedback to the writers on the stories. Traditional publishers leave that to the author to connect off platform with readers. 

Iterative Books: Ever evolving content

Book collaborations often happen before the book gets published. Editors work with an author to clean it up or search for errors. But a few eyes aren’t likely as good as the crowd. If I were a reader and I found a typo in a book, there isn’t a way to push that change back to the author so that the next person who downloads that book doesn’t see it. 

“The Everything Store” is a great book on Amazon but their history is still being written. I wish the story would continue as new information becomes available, like the release of the Kindle Fire phone that was just mentioned at the end. I’d love to hear about what Stone learned since publishing the book without having to wait until he publishes an entirely new book.

Even if Stone doesn’t have the time to write in new details about Amazon, it’d be great if the author could collaborate with a collective of writers to publish additional chapters to the book over time.

Instead of a single tomb in my kindle app, creating an evolving book that reflects what new information emerges. This is asking a lot of the author and questions the traditional way books are priced, but that’s why it’s ripe for disruption. 

Where will this happen

The capability of technology means it’s possible, but the industry hasn’t adopted those ideas. Wikipedia has shown that multi-authored histories or non-fiction entries are possible. Unfortunately, the publishing world sees it as a threat, not as the social innovation that’s missing. 

There are innovations happening in this space. Gitbook has taken Github’s collaborative text capabilities and used it to create a platform for authors to sell books. There are some early non-fiction books on the platform but many aren’t charging money. That’s when more publishers take notice, when the revenue makes sense. Hopefully that won’t happen after they stop publishing new books.

Have you ever contributed to a book or thought about writing a book as a collective? Any good tools you’ve seen?

(Photo: Splice in action, source: Billboard.)

Two weeks ago we kicked off the first Product Management Summit of 2014. It’s an event we hold twice a year for a full day to bring together all of the Product managers from the USV Portfolio. The goal of these summits is to provide portfolio peers a place to share best practices, lessons learned and tools that make the biggest impact. Given the diversity of perspectives, I always learn a ton from these events. 

As a way to give more insight about each company, we always start the day with introductions and a question. At this event we asked each Product Manager to share one of the KPIs that they are currently focused on.

As you would imagine, most product KPIs revolve around user growth, downloads, content consumed, and revenue growth. Now one KPI that surprised me was from Splice, it was “number of collaborations”.

This makes sense, Splice is a platform that allows music creators to share pieces of music in order to collaborate to make a final song, but it’s the first time I’ve had a company mention collaboration as a KPI.

Now, collaboration is a not a new thing, especially not in music. Many songs on Soundcloud were collaborations between multiple people, they just didn’t happen on the platform. Since Soundcloud isn’t a tool for creation, they wouldn’t measure number of collaborations, only completed songs. Shared works in progress and final products have a home on SoundCloud, but not the process in between. 

Building a platform focused on multiple people working together brings up some interesting challenges: 

1. Collaboration already happens, why is it a problem to solve?

Most collaborations happen offline. Co-creating in the open is challenging and there aren’t many tools that help make it easier (yet). The Postal Service got their band’s namesake from sending files to each other by mail. Now with digital file sharing, files can be shared in an instant but usually aren’t shared publicly. And even if they are, it requires a purchase of closed software like Abelton on both sides to open or change the file. 

2. Collaboration as a digital workflow can be clunky.

If you work on a team of more than 5 people you’ve probably used a tool to collaborate on a project. Whether it was Google docs, Asana or Pivotal Tracker, members of your team likely had to make adjustments to their regular workflows to participate in the collaborative workflow. If everyone isn’t using the same tools, it’s harder to work together than defaulting back to email. 

3. Roles and responsibilities are undefined and changing. 

If you’ve used a digital collaboration tool with your team there is usually a clear definition of who’s on the team, what they will work on and what the end goal is. With an open collaboration platform, people can collaborate with people they’ve never met. The only unifying incentive would be the final product, but that can be largely undefined until work begins. 

4. A social network built on differences.

Facebook and Linkedin, are social networks based on people you know. SoundCloud, Twitter and Wattpad are a social network for people with shared interests.  On a collaboration platform, it’s a social network of strangers who have different, but complimentary, skill sets. If everyone was the same, it may not create interesting collaborations. It’s the fact that individuals find people who are different than them that makes it work. 

5. User acquisition should come in twos. 

For most social networks user acquisition is very much a single player. If you acquire one customer and they start using the product, that is a win. With a collaboration network, you need at least two people. If people were able to collaborate without the platform, why wouldn’t they do that? There isn’t really a ‘single player mode’. You need two people working together to consider it a win. 

6. Convert teams but encourage side projects. 

There will be existing teams that use a collaboration tool. It might be harder to get those team collaborations on platform because they probably already have an offline workflow to complete tasks together. Github is a great example of a collaborative tool that teams love. Developers get hooked on the tool at work and then expand to use it for themselves to work on personal or open source projects. 

7. Skills make the team, acquire talent to fill gaps. 

The ideal customer for a collaboration network is someone that has an underutilized skill and wants to collaborate with other people. Or someone who has a project they started that is missing something. They key is to help surface these skills or projects to the network to encourage collaboration. A customer must know what they are good at and how they can contribute. That can be a harder target to hit with user acquisition since it could be very open ended. If the person who started the project already knew someone who could help complete it, they could’ve brought them on. 

Closing thoughts:

I’ll be curious to watch as more collaborative companies figure out the best way to grow their collaboration KPIs. From Splice to Scratch, Github to Assembly, the next wave of social is emerging. This time it’s about bringing together strangers with complimentary skill sets, not just shared interests. Where else have you seen this happen?