Growing a tech startup 30 employees in less than one year
This is something that I have now done many times over in my personal career, being a very early engineer at many places that required my expertise, not only in #engineering but in people, culture, coaching and mentoring, not only of the staff, but of the founders. It’s a hugely fun and rewarding (not monetary) journey to be on and I’m here to give you a guidebook of sorts on how this happens over and over – so that maybe the rest of #Toronto entrepreneurs and technologists can have a glimpse at how this could work for them.
Genesis of an idea
As everyone can guess, the entire journey starts with an #idea, an “a-ha” or “eureka” moment in which some bright person (or set of people – in the case of co-founders) has a near genesis moment where an idea almost just comes to them. Whether it be from prior experience in a tangential field or being at the right place at the right time (usually) or by some flash of dumb luck, some version of an idea must exist – something that you can make (or have made) and something that would sell (to someone).
Not all ideas are created equal, and whether you decide to build it yourself (you have someone that can at least create adequate mockups on the founding team) or whether you have to hire to fill those gaps, the next step is absolutely critical.
Prototyping and proving it out to one person
Mockups come first
That’s right, in prototyping, you really do not want to spend your most valuable resources, time, money and people (since you probably lack all three at this stage) on anything but low-fidelity mockups. At this point, you really can start with drawing things out on paper and getting some traction (or agreement) from your friends and family (or your extended network on an app or service that would be out of their realm of understanding).
Starting with something like what I show below is completely understandable and should be your goal before actually spending any real money on polished or nice wireframes (or time if you’re able to produce them yourselves).
Show the mockup to everyone
So now this exists, it’s time to get it in front of people. Who though? My thought is that you get it in front of everyone you know, but hopefully not people who are completely agreeable to everything. You need to find a representative group of friends, family or peers that would understand where you are trying to go with this idea get a lot of feedback.
It’s crucial you actually take notes at this point, so bring along a ton of notepads and if they’re okay with it, record every interaction with them; there could be subtle things that come up while you’re presenting to them that you don’t notice which are surfaced when watching a video later.
Make it more polished
Now that you have a bit of an understanding of where you’re going with this, you need to ensure that you start producing something friendlier for your designers and/or developers to be able to use. At this point, you want to go through the exercise of using tools such as Visio, Lucidcharts, Balsamiq or Sketch.
Make your sketches interactive
You will typically cycle through some mockups at this stage that look sort of like the above (if you’re creating a mobile app). At this very key stage, it would largely benefit you to make these mockups / sketches interactive, so that they intended user(s) can actually see what they’d be buying into at the end. Showing people static photos and telling a story is one thing, letting them play with the “app” through a mockup or sketch is so much better!
So much better in fact that I’ve actually sold Enterprises on apps that I’ve sketched out in Balsamiq and Sketch by having them play with it and then telling a very good narrative.
Now this interactive mockup is built so you want to start showing this to people in the know or in the business to see if you can start to get them excited. Ruffle through your rolodex (if you don’t know what that is – it’s your contact list) and look for people you know that you can show this to. If you’re organized, you probably thought of these people when your idea was being discussed among founders, so you should already have prepped them for this inevitability.
… I’ve actually sold Enterprises on apps that I’ve sketched out in Balsamiq and Sketch by having them play with it and then telling a very good narrative.
Super fast user feedback
Below is a standard manner in which I like to test my apps, it’s pretty exhaustive, but you should definitely follow along.
Reporting Usability Test Results
Running a Usability Test
Once you have planned your test and recruited your test participants, it’s time to get ready to conduct your test. To do so, you’ll want to think about which moderating technique is right for your test, set up your space and equipment, and make sure that you do a pilot test prior to testing with actual participants.
Recruiting Usability Test Participants
Planning a Usability Test
One of the first steps in each round of usability testing is to develop a plan for the test. The purpose of the plan is to document what you are going to do, how you are going to conduct the test, what metrics you are going to capture, number of participants you are going to test, and what scenarios you will use.
Typically, the usability specialist meets with the site or product owner and members of the #development team to decide on the major elements of the plan. Often, the usability specialist then drafts the plan, which circulates to management and the rest of the team. Once everyone has commented and a final plan agreed upon, the usability specialist revises the written plan to reflect the final decisions.
Usability Testing
Usability testing refers to evaluating a product or service by testing it with representative users. Typically, during a test, participants will try to complete typical tasks while observers watch, listen and takes notes. The goal is to identify any usability problems, collect qualitative and quantitative data and determine the participant’s satisfaction with the product.
To run an effective usability test, you need to develop a solid test plan, recruit participants , and then analyze and report your findings.
First Click Testing
System Usability Scale (SUS)
Contextual Interview
Focus Groups
Individual Interviews
Personas
The purpose of personas is to create reliable and realistic representations of your key audience segments for reference. These representations should be based on qualitative and some quantitative user research and web analytics. Remember, your personas are only as good as the research behind them. Effective personas:
- Represent a major user group for your website, app or service
- Express and focus on the major needs and expectations of the most important user groups
- Give a clear picture of the user’s expectations and how they’re likely to use the site
- Aid in uncovering universal features and functionality
- Describe real people with backgrounds, goals, and values
Online Surveys
Scenarios
Scenarios describe the stories and context behind why a specific user or user group comes to your site. They note the goals and questions to be achieved and sometimes define the possibilities of how the user(s) can achieve them on the site.
Task Analysis
Getting some traction
You don’t have a great product if you can’t pick up traction without spending money and getting word of mouth. I do think it’s a better alternative. At this point, you should not be spending money on AdWords or crazy referral programs, you need to get your app into the hands of possible users.
The first ten should be easy. If you talk to ten people that are right in your target market, four of them should want to sign up right then. Knowing your target audience is key. Don’t waste your time casting a wide net. Go where you’re known and loved.
A sustainable 40% conversion rate is amazing. Give everything away for free at first. Don’t let them worry about anything except getting their hands on your product.
Just as above, now you need to constantly talk to these users. I talk to everyone, whether they loved or hated the apps I was building (or founding), but I learned a lot. Do not be afraid of criticism, it is your best form of guidance. Get tough, then get going.
With a small test-bed of users, you now want to try to increase that number tenfold. At each juncture in this process, you want to learn who your customers really are, why they are signing up, what’s keeping them around (and using your app or service), and if/why they left.
Learn what the real value is—then lean heavy on that. Evaluate and have a plan.
If you are in the B2B space and need to get results, I have used these two tactics which yield results pretty quickly. The first is to try paid search ads (I prefer AdWords and LinkedIn over Facebook for B2B, but have heard of people having success with the latter in B2B).
The second is to create an event (a panel of sorts) where you bring together the experts in your particular product area, and get them to debate where the market is going. Use this event as a hook to talk to prospects and invite them to the event to start building a relationship with them.
Lastly, I often tell B2B startups to do outbound cold calling, the way that a business development rep would do it. The reason why I don’t put inbound content marketing first is because it typically takes time to ramp up, and as an early stage #startup, you need results fast. Using the event I described above gives you a great reason to call them where you are offering them value, as opposed to just simply trying to sell them.
A little notoriety
The next step is to garner a little press goodwill; the reasons are plentiful, and mostly about being seen. Without a real product or traction, you might be wondering how you would get noticed by them, so here are a few tactics I’ve used:
Announce your launch. If your #company is just starting, or if it has officially launched within the past few months, you can formally announce your launch with a press release.
Build a relationship with local press. Next, work on building a relationship with some of your local press outlets. You can start by sending an email to editors or journalists to introduce yourself, while including your launch press release. Let the journalist know that you’re available if they’re ever looking for local business owners’ opinions, and ask them if there’s anything they need at the moment.
Get involved with local events. You can also work indirectly to increase your exposure with the press by capitalizing on events that the press is already interested in.
Host events. Consider hosting your own events, especially if you have the space for it. These can be practically anything, depending on your current resources and the nature of your brand.
Volunteer. If you don’t have the funds or the inclination to sponsor a program or host an event, you can always consider volunteering with your staff for a cause that you believe in.
Collaborate. Finally, consider collaborating with another company, influencer, or personality that already has a significant following or a history of being featured in the press.
The first (other) hire
At this point, you’re likely a few months into your journey and hopefully you’ve caught the eye of a few pre-seed angel investors who have floated you a bit of money to try to build out the idea to a larger scale. This is where you actually start moving toward a minimum viable product (#MVP) and spend a little bit of money getting a little more organized.
You now want to go get yourself another staff, someone that will supercharge your efforts (building the app) and hopefully someone that has been there before.
Senior vs junior
I have seen many people hire from a wide range of seniority and this is a very difficult choice to make. Often, at this stage, you will have a tough time convincing many senior resources to join on simply your passion and prototype. This is the juncture at which you must make a decision on whether you’ll hire a senior person (one who will command much higher salary) or try your luck at finding someone that is a superstar in waiting.
Your leadership team and tech leadership
The latter, of course, is a really good choice if you’re super technical yourself, however most founders (in Toronto) are not and need the leadership of someone like me. If you, as a founding team, are devoid of someone who has architected as many large, distributed, very engineering focused systems, you should really look to hire a very senior resource, likely an architect that has tons of clout and can help you attract other talented engineers later once you’re out of the MVP stage of the company.
Has to be super technical
This highly technical person should be your rock going forward and should lead all your tech decisions. They need to have full autonomy and you need to get out of their way. If they lack anything in terms management, scrum, coaching, etc… expertise, then you will have to fill that in, but that’s easier than an absolute technical person.
Hiring a non-technical person
You’re well on your way now to building up a cool product that is saleable in the market, so what should the next hire be? My thought is that you now need a rockstar sales and marketing professional, hopefully someone that you can see occupying a CMO role down the line.
In case you missed it in my last post (Structured and Organized tech management teams lead to profit and valuation), a CMO owns the marketing strategy-and that often includes the sales strategy-and oversees its implementation. The CMO will know (or learn) your industry inside out and helps you position your product, differentiate it from your competitors’ products, enlist channel partners, resellers, affiliates, and make sure customers learn to crave your product.
They should market and sell, these are not mutually exclusive
Since they are indeed meant to do both of these functions, you need to empower that person to do two things really well. Build up a funnel of people who are looking to buy (or who might ostensibly be looking to buy) your product or service and ensure that it is being sold.
This person needs to be very sensitive to what is going on in the product itself and ensure that they keep up to date with every feature, UI/UX decision and the #roadmap from the senior engineer and/or architect. They have a lot of hard work ahead of them, as does the entire team and will need to forge a ton of relationships, build good will and understanding of the product and company in the market and grow out the processes and frameworks (again, laying the groundwork and foundation for further team members to join the team).
Putting some process and frameworks into place
Now that you have a strong foundational team in place, it’s time to put them all to work at a crazy pace. This is where rubber hits the ground and where the senior, motivated and properly incentivized hires will shine (or maybe you shouldn’t have hired them in the first place).
If you, as a founder, have created businesses before, you will know that what they really need at this stage is a lot of organization, focus, vision and future (outlook). It’s now time to ensure you put some of these frameworks in place.
To run a profitable business, you must be able to recognize where your costs are coming from, or how much capital you need to operate. Start by familiarizing yourself with the fundamentals of Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR), gross margin, expenses, and cash flow.
Outsource what you need to from an accounting or tax perspective, but make sure your most experienced team member manages those numbers and regularly reports them transparently to the rest of the team: management transparency is one of the top factors that determine employee happiness.
It can be as simple as creating an Excel sheet with your main metrics and going through it together every month.
The more complex your business is, the more attention you need to pay to the legal aspect of your business. Put some effort into your Terms and Conditions (T&Cs) even before you get paying customers. Have a basic framework in place, think about your liabilities, and build a foundation so you don’t regret not having done it sooner.
If you offer a simple service, you can start by looking at services or businesses that do something similar to yours, even in a different industry or market: check what they highlight in their terms (look out for things like invoicing, confidentiality, obligations, indemnification, warranties, limitations, etc.) and use that as a framework. The same goes for your privacy policy.
If your service falls under regulatory aspects, or you have customers in several countries, you might need to consult or hire legal counsel. (i.e. if you have EU-based customers and are handling or storing personally identifiable information, you will need to become General Data Protection Regulation (GDPR) compliant by May 2018 or face hefty fines).
When you think about implementing a process, define your success criteria first, then identify the sequence of events that will lead you there. You can then review and refine accordingly as you go along, depending on how close you are to your objective.
Also, remember that accountability is key: once you define your success criteria, you must make someone accountable for the journey to take you there. If you don’t know who owns a customer’s complaints, for example, then your processes need strengthening.
Most importantly, make processes important from the get-go: you can get by fine as a small team without clear processes, but building them now will provide strong foundations for future #growth.
Turning the corner
So now all of this is in place and you’ve hopefully been able to sell some clients on the story, the journey and the vision of the product. You likely are using them as partners to help you define the thing you are building and pushing you to new heights.
So now is the time to scale up your staff and take it to next level. Here is where you’ll want to hire people that are ready made managers, men and women who can step in, lead, manage, measure and be responsible for other people’s progression.
Hiring some leads and managers
So what makes a good manager (or lead) in general? Here is what I think:
Teamwork
Good tech leads act as a member of the team, and consider themselves successful when the team is successful.
Technical vision
Good tech leads have an overall vision for the technical direction of the product and make sure the team understands it.
Discussion and debate
Good tech leads listen and encourage debate. When the team is unable to resolve a debate, they describe a process or framework of thinking that would help them resolve it.
Project management
Good tech leads are proactive. They make sure technical progress is on track. They work with team members to come up with estimates and to establish intermediate milestones. They anticipate areas of concern and make sure they are addressed before they become a problem.
Pragmatism
Good tech leads are pragmatic and find a balance between doing it right and getting it done. They cut corners when it’s expedient but never out of laziness. They encourage their team to find temporary shortcuts or workarounds to problems that are blocking overall progress, and to build minimum viable infrastructure for launch.
Communication
Good tech leads know that their role is much more than writing code, that effective communication is a vital part of their job, and that time spent making their team more efficient is time well spent.
Relationship with Product
Good tech leads are in a conversation with product managers and designers about how the product should work. They are not afraid to push back on decisions they disagree with, but keep the product goals in mind and know when to accommodate them.
Personality
Good tech leads are easy-going but assertive. Bad tech leads are confrontational and aggressive. Good tech leads emerge naturally and earn respect through technical competence and experience. Bad tech leads think their title confers respect and authority. Good tech leads are always looking for ways to improve.
Hiring more senior tech folks
So now that you have some tech leads, and likely a few interns and co-ops, the time is right to set up that pyramid mentioned above – the 3-3-2-1 pyramid and ensure that you have enough senior resources to lead the many juniors you’ll want to employ.
You are likely gaining a bit of traction and want to make sure that it keeps moving forward. Not only do you need to staff up your technical team, it’s now also time to think about staffing up your product team, your marketing team, your sales team and your operations team(s).
Now you have an MVP
All of this hard work has now led you to a minimum viable product and likely a minimum viable company. It is (hopefully) just the end of year one and you’ve got some great clients to speak of; clients who are willing to be your reference clients and have some strong stories and good will built up in the market through your marketing efforts.
Your funnels (both talent and client) are hopefully overflowing at the top of the hopper and you’re ready to onboard people and users. So where do you go next?
What’s next
Much of what’s next is out of scope of this specific post. There is still a ton of work to be done, however you’ve at least now proven that your initial thought on what might sell actually works. Now is the time to move toward a Maximally Buyable Product (MBP). The MBP has the set of features needed to capture the maximum potential opportunity in a market. Those features – which make it easy for people to try, then buy – include:
Easy To Understand
To be “maximally buyable”, the product should be simple to understand. It’s hard to market and sell things that people don’t ‘get’.
Easy To Try
Doesn’t matter what market you’re in, people believe they live in an age of abundant choices. Given this perception, to be “maximally buyable”, you need to ensure that the product is designed so it’s easy to try. This takes investment.
Easy To Buy
To get the maximum amount of sales for your product, you need to have the minimum degree of pain in the buying process.
Easy To Stay
Since the revenue you see from a customer is spread out over time (in all likelihood), the MBP ensures that customers are kept happy for as long as possible. If you design for customer longevity (not just customer acquisition), you’ll find that often a different set of dynamics are at play.
Easy To Leave
Though you want customers to stay with you as long as possible, designing your product to make it easy to leave is an important part of its “buyability”. A “feature” that supports this easy to leave notion is a robust “export” feature (to avoid data lock-in). The easier you make it for customers to leave, the more likely they are to buy in the first place.