Don't start a company without a plan in place for constant review of Key Objectives and Results!
And more advice from Rachel Renock, CEO and Co-Founder of Wethos. Wethos helps with scoping projects to splitting payments. They make it easy to team up and transform your one-person shop into a full-service studio. Having come from the agency world themselves, they built Wethos Virtual Studios to help you scale your business up and capture larger profit margins like never before. Wethos recently received a new $8M round of funding. They have powered nearly 10,000 virtual studios, which have won over $54M in projects by leveraging Wethos’ tools.
1.Don't hire employees that are too junior!
A mistake that I made early on was hiring people who were too junior to work underneath me. At a very early stage, it is tricky from a hiring perspective to find the right middle ground between someone senior enough to operate on their own that comes in with some level of expertise or someone who won't be afraid of getting their hands dirty. You may hire a Director level at an early stage, but that doesn’t mean that there will be a budget to have a team under them. I think that generally, you are looking for a specific personality type. I believe that if I could go back, I would be hiring people after my first seed round who had 2 to 4 years of experience rather than 0 to 2.
I look for folks who are resourceful and can figure things out on their own. At a very early stage, I would look for people who don’t mind a little bit of chaos. Giving people that notion upfront and making sure that they are comfortable with new information, and adjusting as things go along, will help manage their expectations.
For us, what was best was finding someone at a current job at a more junior level who was not getting the opportunity to grow. Typically this is the best kind of hire because you don’t need to give them a six-figure salary because they don’t have that level of experience. Still, they are hungry, and you can afford to pay them a good mid-level compensation. From there, usually, those types of folks grow fast. From my experience, the more ambitious employees are often harder to manage. That is not necessarily a bad thing. But, if you are looking at people that you can bark orders at, you don’t want to hire these types of employees. Those with a more innovative mindset will contribute a lot more. When you have a small team, you feel the impact of everybody’s contribution.
2.Investor red flag on equal equity split.
At an early stage, the most significant split I did was with my Co-founder. Originally I had three Co-founders, 40 % towards me and 30% for the other two. I think we did the split the right way. It is a red flag to many investors when you have Co-Founders, and the equity is split 50/50 because it is not clear who is in charge and who is the CEO. For employee equity, we had an option pool set aside that was 10 percent overall. We have tiers, both salary and equity tiers. Also, you have to make sure that there is always a year cliff date because you would be surprised how many people don’t make it to that point!
3.Don't start a company without a plan in place for constant review of Key Objectives and Results!
I have a recommendation for a book called Radical Focus. It is about setting OKRs (Objectives and Key Results) as a very small team. I initially thought this was too much structure for us, but shifting over made a massive difference. This book is excellent because it tells the story of a tea startup. And it frames everything within the context of starting this company and how it grew. Generally speaking, we set OKRs for every corner of the business. You determine a North Star goal, and then you have three metrics. You define the objective and measure your success against the goal. For us, the key result for this quarter was X % growth in studios winning contracts, and X % in invoices and billing. What we found is that it was best to set one company-wide goal. Too many metrics can be very distracting. Try to hone in on what are the three key metrics for the business. There is no one size fits all. You need to learn all the metrics for your type of company. We went from SAAS to a fintech business. My projections and my metrics were utterly different. You should understand the dynamics of whatever your business does and set your North Star accordingly. You are communicating to your team and investors that these are the metrics you are assessing for business.
Not following through with the OKRs is the mistake that most people make. You set them and then forget about them. Every Monday we see where we are to date. Every Friday, we have an all-hands meeting. You can question how much progress can be made in a week, but the point is that you are looking at it every week even if it is not moving. It is all about accountability. If you don’t take a step back and look at things every week, every month, every quarter, you will get lost in the day-to-day. Time passed does not equal progress. Reporting is great when you are doing well and painful when you are not. What you are understanding is what your team is capable of doing over these time periods.
4.As an entrepreneur, you need to be married to the opportunity, not your own idea!
We have pivoted a bunch. Here is my number one thing. Your job as an entrepreneur is to be married to whatever that opportunity is, not to be married to your own idea. For us, a lot of information came from feedback from customers, changes in the market, changes in demand, and changes in customer behavior. We were doing all these mini pivots along the way until we saw this hypergrowth start to take off. It is a hard thing to find product-market fit. There is no way to define it. It is like finding love. When you know, you know. We have been around for five and half years, and just this last year things started taking off. Half the battle is making it this far. You want to have a vision, but you can’t be attached to how you will get there that you lose sight of things that are not working. You can’t force people to behave or do things a certain way.
We have grown 35-40 % in new users MOM for the last nine straight months. After the first three months of that kind of growth, I realized this machine was working. Our word of mouth and organic traction, plus the paid dollars in Google search and a little bit of Facebook and Instagram were compounding each other. I knew this was working because I wasn’t changing the marketing budget every month, and we were still growing. Because I was not pouring more dollars in, and it was still growing, that is when I knew that people were out there talking about us. Our CAC went down on the same spend.