Recruiting and retaining talent is critical for scaling your startup.
As your business grows, hiring a team to turn your vision into reality creates an inevitable founder dilemma: how do you find top-tier candidates and inspire them to join you? How can you effectively screen for rockstar candidates at scale? And once you’ve assembled your dream team, how do you keep them inspired by your vision long-term?
Luckily, we hosted former SVP of Ziprecruiter and people expert Kevin Gaither for an Outlandish Speaker Series, where he shared his tried-and-true recruitment best practices and lessons from his mistakes along the way.
From his time at multiple early-stage companies to growing Ziprecruiters’ sales team from 1-500+ employees, Kevin likens recruitment to dating. So, regardless of your recruitment method, keep “swiping right” until you find a candidate who excites you, avoid trying to force a fit, and beware of settling because you’re tired of looking!
Here are a few key aspects to always consider when evaluating potential matches:
Before you start swiping, understand what a “great” fit for this position means in quantifiable ways. First, think of your ideal candidate, then make a list of the specific characteristics, experiences, skills, etc., that will help them succeed in the role
Now that you’ve outlined your ideal candidate, it’s time to date! While interviewing, evaluate your potential hires against your ideal candidate. Using your ideal candidate as a rubric will enable you to screen and rank potential hires efficiently and effectively at scale.
When looking to expand a team, searching for a clone of already existing team members is a mistake. Using a real person as your screening rubric often leads to dead ends and potentially overlooking even better talent from a different background. Instead, reflect on what characteristics, experiences, skills, etc., enabled your top performers to succeed in their roles, then evaluate which potential hires share those qualities.
If recruitment is like dating, hiring is like marriage. In both arenas, Kevin’s advice is the same: don’t take the plunge unless it’s love! In HR-compliant terms, don’t settle for a candidate that doesn’t excite you. If a potential hire requires extensive internal convincing, they probably are not the best fit for the job.
After finding a rockstar candidate, it’s time to put a ring on it! The hiring process is arduous and time-consuming, so retaining your dream team is a top priority.
From the day they enter the office to their promotion to high-level management, it’s essential to create the best possible environment for employees to keep them inspired long term.
From the first day on the job, employees should have explicit schedules with proper training in all aspects of the business with clear delineations of how their role fits into the puzzle. New employees are not set up to succeed without adequate onboarding, which will inevitably upset the balance of their teammates, too. After the strategic decision to hire a top-tier candidate, avoid the tactical mistake of poor onboarding at all costs.
In order to both motivate and provide security for employees, it is essential to have clear expectations on goals, firing thresholds, and company culture norms. Likewise, employees expect their performance to be reflected in promotions and pay raises. So, setting clear, quantifiable benchmarks—via sales numbers or other measurable metrics—allows them to run towards concrete goals from day one.
Prioritizing performance alone sends the implicit message that it’s every person for themselves—quickly killing team-wide collaboration and individual motivation. Success at the expense of company culture is a sure-fire way to lose rockstar employees to companies led by more empathetic leaders who value their high-performing employees as human beings, too.
While it’s sometimes inevitable, firing talent should be a last resort. Get curious about why your rockstar candidate is falling short. If they looked so good on paper, what is getting in the way of their success under your leadership? In the interim, finding different roles for struggling employees should be the goal of managers.
The team you hire will directly impact your startup’s capacity to adapt and grow, so being thoughtful from recruitment through retention should be a high priority for founding teams. And as your company grows, you must build recruitment, hiring, onboarding, and employee retention processes that can scale with your organization and set each team member up to succeed in executing your vision.
The tools Kevin Gaither amassed through years of experience provide a vetted framework. Still, the specifics on how you execute these Dos and Don’ts will vary based on your company’s specific context and experiences—just like dating!
For more expert advice on building and scaling your startup, check out our event library and Field Notes.
The pandemic changed how we do business, pushing sales teams to adapt to new, more virtual-than-ever strategies for reaching customers. Before the pandemic, many companies nurtured leads in person through dinners, meetings, events, etc. Now, the #1 sales and marketing asset for your business is its website because, in a virtual-first world, your company’s website is your new storefront.
First, invest in your website early to set your sales team up for success. Aside from curbside appeal, your website must reflect your vision via engaging content that is easy to navigate and drives users to connect with you further.
However, a beautiful website alone won’t do the trick anymore.
Website conversions are down from 10% in 2010 to <1% in 2022. The pandemic expedited the shift to virtual-first shopping, which has impacted consumer activity, too. First, users are less willing to give up their personal information. Second, converting virtual leads poses unique challenges:
Response time is critical, but so is replicating the personal touch of traditional sales strategies. As with in-person sales strategies, you need to understand: Which user in the market to buy? How do we engage with each user in a personalized way? How do we meet users with buyer intent at the exact moment they want to talk to you?
The challenges of your virtual storefront will require tools for tracking prospects on and off your website.
You will drive potential customers to your website through a variety of marketing and sales campaigns, including paid ads, outbound sequences, SEO, review sites, social media, event promotions, and email marketing. Using UTM tracking tools, Google Analytics, or a pipeline generation tool like Qualified, you can track the highest-performing sources of inbound traffic and personalize subsequent marketing touchpoints to a greater degree.
For example, here’s how Qualified customers increase the >1% web conversion rate to +25% through their pipeline cloud:
Tracking user behaviors throughout your sales funnel will enable you to identify and assess bottlenecks or leaks hindering your conversion rates, such as willingness to pay, competitive price points, when users ghost reps, time from the first touchpoint to closed-won, customer sources, and more. Then, the next step in your sales playbook is segmenting your accounts, pricing, and packaging to create a repeatable, competitive funnel.
A strong sales strategy sets the foundation for every successful sales organization. Ideally, it should focus the team around a set of shared goals, enable the team to build trusted relationships with customers, and ultimately drive more pipeline and revenue. Nobody knows this better than Eric Sikola, President and Chief Operating Officer of Qualified.
With 20+ years of enterprise software and SaaS experience, Eric knows what works. Watch the replay of his Outlandish Sales 101 session for his tried-and-true selling strategies and best practices for startups so you can convert more leads than ever before.
This Field Guide is a synopsis of the first half of Eric Sikola’s 45-minute Outlandish Sales 101 presentation. Click here to view the entire presentation and audience Q&A, and access the deck!
For more expert advice on building and scaling your startup, check out our event library and Field Notes.
The consumer packaged goods (CPG) market is massive, expanding, and becoming more and more distributed—with new players stepping into the ring every day. The $2 trillion industry encompasses the food, beverage, household, and personal care products consumers rely on habitually, making brand loyalty the cornerstone of successful CPG brands.
Accelerated by the pandemic, consumer preferences have evolved along with the shift to digital marketplaces. They want the convenience and speed of online retail, but, due to the abundance of digital retailers, they are now facing a critical choice overload. With more CPG brands fighting over digital ad space and, subsequently, consumers’ attention online, the digital fatigue is real.
While online shopping is incredibly convenient, consumers will rarely convert to new products without trying them first. Think of your go-to brand of toothpaste, deodorant, tampon, etc. To convince you to switch from your tried-and-true household staple, CPG brands are bidding against each other for your attention via digital marketing campaigns with dismal conversion rates.
In today’s world, digital just isn’t enough. CPG brands need more effective ways to convert customers, and that’s exactly what we offer at Strapt Vending.
After a frustrating encounter with a crusty old tampon dispenser, I realized that the existing vending solution—unchanged since the 70s—was past due for an overhaul. I quickly learned that solving the unmet consumer need for basic access to [paid] period products required a more symbiotic partnership between consumers, consumer brands, and hosting facilities. Otherwise, there was little incentive to bring these dispensers into the 21st century.
So, I shifted the Strapt strategy to solve for facility and CPG brand pain points, too. In these brands’ increasingly crowded market, the problem is twofold: 1) reaching new consumers and 2) overriding their crippling overchoice dilemma.
Through contactless IoT dispensers, Strapt Vending offers a new and frictionless way for users to sample personal products and the first fully transparent opportunity for brands to reach customers at their exact point of need.
For Strapt’s brand partners, this means reaching their target market at a critical inflection point: exactly when and where they need the products via a channel that brands have never been able to utilize until now.
Through high-volume sampling campaigns, Strapt offers an invaluable asset to partner brands: full transparency into user interaction data, which has historically been unavailable via old-school sampling methods. In the words of one of our investors, Leura Craig of Outlander VC, “By taking a pretty old-school thing like vending and completely turning it on its head, Strapt is the first IRL sampling-based marketing tool of its kind. Not only is sampling an effective way to get in front of new consumers, but it’s likely a brands’ only chance at converting them away from a brand they depend on habitually. Strapt’s strategy is the future of this marketing technology, especially for CPG brands.”
Strapt has built the ecosystem for these dispensers to thrive in a way where everyone—the brands, facilities, and consumers—can win.
Since launching in August 2021, Strapt has partnered with three consumer brands, and our 150+ waitlist keeps growing! Via our 24 live dispensers, Strapt partners have reached 100,000+ consumers total and 4,000+ vended products—90% coming from unique users.
Backed by Outlander VC, Strapt is raising $2M to grow our team, expand our analytics platform, and scale production to support dispenser demand.
For expert advice on building and scaling your startup, check out our event library and Field Notes.
When it comes to choosing a co-founder, I’ve learned there’s no hard and fast path to success. In fact, I think most entrepreneurs would agree that finding and choosing an excellent co-founder is more of an art than a science. That being said, below are some tried and true ways to set yourself up for success.
Hang around the hoop
Before we even begin discussing what to look for in a co-founder, we have to talk about how you find potential candidates in the first place. My best advice to entrepreneurs has always been to hang around the hoop. For those of you who aren’t basketball-fluent, the phrase means that to have any success, you’ve got to put yourself in the best position to score—around the hoop. Your hoop is anywhere good talent might be found: meetups, conferences, pitch competitions, Slack channels . . . you get the idea. Colleges are also great resources; you can reach out to computer science professors and leaders of student entrepreneurial and innovation clubs. If you have a good idea, can tell a story, and talk to enough people, the odds of finding folks who might be interested in joining your venture are in your favor.
Look for complementary skills
This may seem like a no-brainer, but people frequently get it wrong. Many founders are drawn to people with professional backgrounds similar to their own because they already speak the same language or because they’re often in the same spaces. While it’s certainly important to gel with your co-founder, it’ll benefit you a lot more, down the line, to have someone whose strengths differ from your own.
The most common example of this is the classic nontechnical–technical co-founder pairing. The combination has many upsides because it lets the two individuals focus the bulk of their attention on different aspects of their start-up’s growth and success. But let’s say you already have a solid CTO and aren’t necessarily looking for a technical co-founder—what then? Find someone with complementary soft skills. If you’re not a stellar presenter, choose someone who can wow a room of investors. If you’ve mostly worked in silo-style roles across your career, seek out someone with team-leading experience. It’s more than OK to duplicate a similarity here and there (after all, you want to have some common ground to fall back on), but being aware of your own weaknesses and finding a way to address them with your choice of a co-founder is wise.
Get input from leaders you trust
Let’s say you’ve got a few people in mind as potential co-founders but you’re not sure how to evaluate them for fit. A few years ago, I was in exactly that position. I felt like I was on a hamster wheel and desperately trying to get off. I realized that determining whether a candidate was a good fit was much harder than I had expected. At the time, I was subleasing office space from an EO Atlanta member. He’d been an entrepreneur for almost two decades. I regularly talked with him about things I was trying to figure out, and those informal conversations were invaluable. When I told him about my problem, he made an amazing offer: “How about I interview one of your candidates and you sit in? I can show you better than I can tell you.” I happily agreed. I was able to watch him in action, and I learned a ton—especially about how to figure out when someone isn’t the right fit.If you and your potential candidates are having conversations or doing things together to get to know one another, consider inviting someone to join you—perhaps an experienced entrepreneur. If you’ve raised capital from credible investors, consider getting their input, too. Whomever you ask to join you, make sure they have a track record of evaluating talent or some experience with entrepreneurial partnerships. Your goal is to have them compensate for your blind spots.
These three recommendations won’t drop the perfect co-founder into your lap, but they will help you whittle your options down to a few strong front-runners. At the end of the day, selecting the right person comes down to who you feel that difficult-to-describe “click” with when you’re sharing your vision. Choosing an excellent co-founder isn’t an impossible task, and it certainly is an important one when it comes to building a company that will succeed under your and your co-founder’s leadership.
For more expert advice on building and scaling your startup, check out our event library and Field Notes.
Founders’ most frequent pain points arise from pushing product development without speaking to their current customers.
Initially, convincing founders to pause product development to conduct customer interviews is a tough sell. To them, it often feels like rendering their current ‘baby’ useless. But I know that ~40% of startups fail because they lack product-market fit, which means building something people actually want is the bare minimum.
Personally, I love talking to users because I find people endlessly fascinating. But, as a founder, I found that formalizing our user interview process enabled us to quantify and track metrics of success and inform how we built Levantr.
Before building your product, start with ethnographic customer interviews. These are often just called customer interviews, but I like adding the adjective ‘ethnographic’ to it because that’s exactly what you are doing! You are trying to observe the users in their natural environment and see how they usually circumvent or deal with the problem you are trying to solve.
Through these interviews, you’re trying to get a glimpse into how people behave and why, so you can create and test more accurate hypotheses about what your users actually want.
There is a difference between people who would use your product and people desperate for it. You must find the latter for your MVP because they will become your cult following.
To start, consider the following:
At my startup Levantr—a collaborative travel planner—our customer segment was obviously people who like traveling, which is… a majority of the global population. So, we narrowed it down to people who enjoy planning, i.e., the people who create color-coded, multi-tabbed spreadsheets and send you SurveyMonkey forms to rally the crew. Of course, we all know at least one person like that.
These Type-A travelers not only travel frequently but think about traveling all the time. What does that mean? They follow travel blogs and are active in FB groups. They were our cult.
First, look for interviewees on platforms like respondent.io, UserInterviews.com, and Askable. If your targets aren’t showing up on research platforms, try creating job postings asking your target profile to participate in a paid study or using social media platforms like LinkedIn to find target profiles to reach out to directly.
When offering money in exchange for interviews, you’ll inevitably attract some bad apples willing to lie to qualify for the study for the fee. However, you can weed them out using carefully crafted screener questions.
For example, here are some of the questions I used to screen Levantr interviewees:
Notice that #4 asks if they will show us their previous itinerary—this weeds out people who pretend to be active planners to qualify. I also ask how they usually get ideas to make sure we find people who think about travel frequently even if they are not traveling.
The last question is intentionally left open-ended to test how much detail they included. You want to find chatty interviewees who will quickly give you the most detailed insights.
Conducting interviews remotely is more accessible, cheaper, and allows you to record your sessions. Recording not only helps you stay focused on the conversation without having to take notes, but investors love to see footage from your user interviews. Plus, you are not limited geographically, which removes any local bias.
The #1 rule of user interviews is to never ask them what solution they want directly. Instead, focus on understanding their problems, how they approach them today, and, most importantly, why. Your job is to observe and ask users to elaborate when they say something interesting.
For example, here’s how we structured our 1-hour user interviews:
#3 is critical. It helps them travel back into a context relevant to your conversation and visualize the problem. Again, you’re triggering the emotions they felt during their last encounter, resulting in more accurate insights. This way, they’ll explain their process and show you how they perform the task.
Now that you collected your user feedback, you must decipher the implications and translate them into a product vision.
For example, here’s a list of steps I take to interpret interview insights while minimizing my own biases:
One of the recurring themes during Levantr’s pre-product ethnographic interviews was the importance of visuals in travel planning.
So, when we built the Levantr marketplace, we made sure that all the tiles/cards for our idea boards and itineraries included pictures. Plus, we knew that prioritizing the visual appeal of Levantr’s branding/marketing was critical to creating a sticky platform our customers love to use.
To close, I’ll leave you all with my favorite example of ethnographic interviews gone wrong: “The Pepsi Challenge.”
Pepsi had a campaign where people taste-tested Pepsi and Coke while blindfolded, then indicated their preference. And surprise, surprise, Pepsi was the winner. Meanwhile, Coke was extremely worried because their internal studies showed similar results. So, in response, they created ‘New Coke’ to mimic Pepsi’s sweeter taste and introduced it to the market with great confidence.
‘New Coke’ failed spectacularly, and Coke’s customers were pissed. But why?
The sip tests didn’t take into consideration the environment in which people drink Coke. People don’t take just one sip when drinking soda; they drink a whole can of Coke with a meal, at a sporting event, at the movies, etc. In the actual use-case contexts, people prefer the crisper taste of Coke over the saccharine sweetness of Pepsi or ‘New Coke’—except in small, sippable doses. The theory is that a home-use test would’ve yielded a very different outcome.
Coke recovered from the ‘New Coke’ fiasco because they’re a well-established brand with loyal customers and money allocated for trial-and-error product development. But startups don’t have the same luxury. That’s why investing a few hundred bucks now to talk to your target audience through a contextual inquiry.
So, what can founders learn from Coke? First and foremost, the quality of your user research will determine your ability to build the product of your target audiences’ dreams. How you ask your research questions matters: carefully consider your word choice and the context of both your interviewees and the problem you’re trying to solve. Finally, listen to your customers before rolling out a ‘New Coke’ product development that nobody wants.
For more expert advice on building and scaling your startup, check out our event library and Field Notes.
Innovation is usually accompanied by the calculated risk of venturing into the unknown. For early-stage founders, this risk can feel especially daunting. With limited funds, data, and time to actually build out your solution, it’s easy to get lost in the frontend development of your company to the detriment of the goal-setting and metric analysis necessary to scale your business successfully.
While every company’s goals will differ, successful companies build their business model around their North Star Metric, i.e. the top-line metric used to define the company’s growth. Broadly, there are six categories of North Star Metric (NSM): revenue, customer growth, consumption growth, engagement growth, growth efficiency, and user experience. The majority of companies set revenue as their NSM, followed by customer, consumption, or engagement growth, and a minority of companies focus primarily on growth efficiency and user experience (1).
Regardless of the specific metric, defining your North Star Metric is ultimately a tool for prioritization. Once an NSM is set, all of your startup operations should be ranked by how much they prioritize your NSM’s growth rate. Founders mismanage this prioritization in two costly ways, which we refer to as being lost in the forest or lost in the desert.
In the forest, think of the trees as all of your startup’s available data. When prioritized equally, the time and resources required to maintain the growth of every tree in your forest will quickly drain the limited resources of your startup. And as your business grows, so will the available data. Even with unlimited resources, the sheer number of trees will eventually make it too difficult for the founder to maintain their sense of direction when they cannot see the forest—their vision—for the trees. Prioritizing every metric is a quick way to run out of resources, time, and direction without growing your venture to achieve its vision.
The classic example of being lost in the forest is a pitch with a plethora of random, “vanity” metrics that look good on paper but do not tie into the overarching vision. For instance, let’s say a founder tells a panel of investors that their venture has 10,000 unique visitors a day, 5 new products a month, a 22% email open rate, and 5,000 followers on Instagram. It’s all good and well that you have lots of web traffic, followers on social media, email opens, and a busy software team, but why do those numbers matter? Have you grown revenue by 20% month over month? Have you expanded your customer base? Is the product sticky? Do your customers like using it? Investors and founders should care about what the numbers mean.
In the desert, you essentially encounter the inverse problem. With fewer (if any!) trees to speak of, the founder is left wandering without any metrics to guide their company’s growth. In this scenario, they may resort to an unsustainable cycle of trial and error in an attempt to guess their way to success. As with our founder lost in the forest, a founder wandering the desert tends to drain their startup’s limited resources by relying on gut instinct or tiny data sets and one-off examples to guide their sense of direction.
The most apparent, dangerous example of being lost in the desert may seem like pitching with no metrics at all. However, in practice, it’s more likely to turn fatal when a founder relies on a mirage created by their limited data sets as direction for the compass for their company. For example, founders without metrics to inform their decisions begin to treat every customer as their NSM. Of course, your direction is bound to change constantly when each customer feedback point becomes how you drive the entire business. With each iteration of this, your product-market fit becomes narrower and narrower. Chasing a mirage is a quick way to mismanage your priorities and deplete your resources.
And in both the forest and the desert, a founder with an NSM need only look up for direction out of their respective predicaments.
The NSM for your startup will be tied to your venture’s vision for the future and the biggest obstacle your company faces to achieving that vision. Outlander’s Jermaine Brown helps founders zone in on their most relevant NSM is through explicitly defining and then working backward from your startup’s vision, mission, and values:
Using your answers to the questions above, rank your metrics in order of importance. You will begin to see how the majority of your metrics will “ladder up” to your startup’s mission, which in turn ladder up to your vision. At the top of your ladder is your North Star Metric—that key metric that demonstrates your vision’s traction and growth. The rungs of your latter are how you incrementally climb: 3-year targets, annual goals, and quarterly goals, etc. You build the ladder with the metrics that support each intermediate goal in support of your NSM.
Ultimately, your North Star Metric is a tool for prioritization and direction of growth for your company. A founder’s clear definition and execution around a North Star Metric will not only lead to better product-market fit but also demonstrates their ability to prioritize growth in every iteration. Not to mention, it will help you measure and illustrate to investors the early traction of your venture, as well as a map of where it’s headed. So if at any point you find that you have somehow missed your North Star, take a moment to evaluate your priorities and pivot your strategy so you don’t end up lost again.
Alex is the CEO and Founder of AC Consulting Group, a recruiting firm specializing in scaling early-stage venture-backed startups. He works directly with founders and functional leaders to fill their highest priority roles with the highest-quality talent in tech. Through his hundreds of hires for many dozens of tech startups via AC Consulting, Alex has seen just about every recruiting scenario a startup might find itself going through.
Though most of Alex’s clients are Seed and Series A, he’s successfully worked with clients ranging from late-stage growth companies down to building Pre-Seed companies from scratch. His hires range from just about anything you can imagine an early-stage company would need— including non-tech roles like Head of Recruiting, VP Sales, VP Marketing, and many more—with a primary focus in engineering and product recruitment.
I’ve spent a lot of time in the early-stage recruiting space and have had the pleasure of working with some fantastic VCs and founders. The way I look at it is the future Zuckerberg’s and Musk’s are in this tech space, and I’m a huge believer and investor in technology because, of course, it’s the future. But focusing almost exclusively on early-stage startups’ recruitment comes with a unique set of challenges.
First, it is extremely difficult for an early-stage startup with minimal notoriety to get responses to job postings. Second, a growing number of professionals—especially in the technical realm—just don’t reply to recruiters. Instead, they want to hear directly from the startup’s founder, which leads us to the third challenge: recruitment is a full-time, specialized job that founders do not have time for.
And that’s where I come in. Using a dummy founder email address, I’m able to execute recruitment marketing campaigns to source and filter through candidates on behalf of the founder. Then, founding teams meet with the top candidates and—more often than not—invites them to join their early-stage team. Since I began recruiting this way, I’ve iterated and perfected my early-stage recruitment funnel method.
For candidates with a background in startups, I’d ask, “What is the best example of a time when you single-handedly changed the trajectory of a company that you work for?” and then push them for excruciating detail. They should be able to explain the impact top-down—a good executive person would understand their impact on everyone’s roles all the way down the line in low-level detail.
For candidates without a background in startups, the first question may be less relevant. So instead, I’d ask them, “What was the most impactful thing you’ve done in your previous roles?” and then push them for the same level of detail as the first question.
In whatever way makes the most sense, dig into their previous experiences to learn what size/kind of impact they’ve made in their previous roles, how they did it, who helped them get there, and, ultimately, will they be able to recreate that impact? Will they be able to tackle major challenges, implement a plan, and then execute on it? Are they willing to roll up their sleeves? Do they need a team? You need to get a sense of how they functioned in previous roles and whether that function makes sense in the context of your company.
In my opinion, you should give equity to everybody on your team. Even if it is just a few shares, it will make them feel bought into the startup’s success. As far as how much you give, that really depends on your valuation and the market value of the employee, i.e. their position and value-add to the company.
People will retain themselves if your company does well, so treat your current employees well and hire good people around them. From a recruiting perspective, treating your team well means avoiding any stagnation of headcount and losing good team members unnecessarily. I always say, “Losing people based on compensation is very expensive.” If somebody wants $10K, $15K, or $20K more, and that makes you a little uncomfortable, trust me when I say that the people who work at your company want to see that potential for growth within the company. So paying current employees a little bit more to retain them will help you in the long run.
So treat your current employees well, give refreshers, give raises, and grow your company!
I highly suggest building remote teams. The concentration of tech folks in the San Francisco market versus the next market down—such as New York, Seattle—and sub-markets like Austin, Denver, Portland, Boston, etc. is night and day. Plus, with remote learning becoming more and more accessible, the perfect fit could literally be anywhere. If you want to scale a technical startup, you need to look outside your local geo and figure out how to incentivize top-tier employees from top-tier markets.
I’m a little bit biased, but my advice would be to hire outside help to recruit from these markets. Beyond that, I’d suggest leverage your network—and especially your VCs networks—to find candidates from outside your geo that are worth the investment of recruiting and converting to hires.
Find hustlers. Find somebody willing to grind and who is sharp and capable and has a chip on their shoulder. Somebody who is a little money motivated because, for inside sales, they’re going to need to be. In my opinion, try to hire someone right out of school who cares about growth and being the best at what they do. Hop on LinkedIn and shoot out some messages, then it should be easy to find folks who fit this personality.
It’s the same as recruiting anybody, but you need to spend a lot more time with them. Generally, the more senior the position, the more acceptable it is to have a more prolonged and intensive interview process. The standard interview process doesn’t apply to co-founder recruitment because you need to spend way more time with them and really get to know them. For example, my former co-founder spent like 20+ hours walking around the park and doing all kinds of stuff to get to know me better. This is the person who will be co-running your startup, aka your baby, with you, so you need to spend a lot of time getting to know them as a person before pulling the trigger. Ideally, you should probably consider potential co-founders that either you already know super well or someone you know and trust also knows and trusts them, too.
For more expert advice on building and scaling your startup, check out our event library and Field Notes.
Forming a new startup is an exciting time filled with optimism and potential. Finding the right people for your team, landing some early investors, and building out your product are all thrilling milestones. But just as important (if not quite as thrilling) are some key legal fundamentals that you’ll have to nail early on.
Every startup needs to get these tasks right at the beginning; failure to do so will lead to difficult, protracted, and costly problems. I should know, my first job after being a partner at a big law firm was cleaning stuff up at Oculus, so it could do its Series A.
Despite legal forms you can find on the internet or from DIY websites such as Clerky promising to make forming a startup easy, more often than not, these seven items are not done right:
We have found that systems, processes, knowledge and counseling, good decision-making – and then recording decisions in such a way as to be able to automatically translate those decisions into legal paperwork – can solve 90% of these problems (and avoid $100,000 cleanups later).
In broad terms, you’ll need:
As you see, it’s a lot of work to take on those seven things, especially if you’re a first-time founder – but they’re absolutely critical to your future success. For that reason, we put together StartupProgram.com, or SUP, so that our clients can efficiently and cost-effectively get these nuts-and-bolts items checked off their to do lists. We’d love to help your startup, too.
Join us on 6/9 at 12 pm ET for the first of our quarterly Legal Lab learning series and our monthly, 1:1 Legal Lab Office Hours with Dan Offner! 🧪
A pitch deck is a critical communications tool for all startups—it is how you tell the story of your venture, make your introductions to investors, and more. However, it doesn’t take much Googling to see that everybody’s got their own opinion of the right and wrong ways to put together a deck or how to present yourself to investors. In my experience as an investor and former founder, the most successful pitches all boil down to one major imperative: a compelling narrative arc.
When you’re speaking to a person you want to partner or work with, it’s always in your best interest to figure out the most impactful way to sell yourself, your idea, or your business to that particular person or group of people. Effective communication is all about presenting a compelling narrative, and when you’ve only got a few slides and a handful of minutes to share your startup’s story, you have to make every word count.
As with all persuasive writing, who you’re pitching to should inform your tone and diction in each iteration of your verbal pitch and every share of your deck. So, first and foremost, do some digging online to see if you can find any clues about what the investor is looking for in a pitch. It’s entirely possible that they have provided a quote for an article about what they think makes a great deck or that they’ve listed their expectations on their website. Use whatever information you can find to tailor your presentation to their most desired style of delivery without sacrificing your authenticity or personal style. It can be a tall order, but it’s worth the effort.
As more startups have learned about our upcoming pitch event, OutPitch 2021, we’ve received many questions about what we look for in a pitch deck. We really appreciate these questions because it shows that the founders not only want to understand us as investors but also recognize the importance of tailoring their message—a skill that is a boon to the long-term success of any entrepreneur and their company.
If you’ve read this far and you’re a founder interested in pitching to the Outlander team, I’ve got some good news! We’ve distilled the core features of a winning pitch, and we’re more than happy to share that information with you. Ideally, your pitch hits the ten critical highlights below in ten slides or less, leaving your audience with a well-rounded view of you, the founder, as well as the problem you’re trying to solve.
The narrative arc of a winning pitch is as follows: Start with the big picture. Then delve into the specifics and how your founding team fits in. Next, bring us up to speed on your progress thus far, then sell us on your venture’s vision for the future. In your vision for the future, be sure to demonstrate your area expertise by identifying any potential competitors or obstacles, followed by your plans to navigate around them. Conclude with your ask. And don’t forget to tailor the details to your audience!
Now you’ve got a pitch with a compelling narrative tailored to Outlander VC, and we want to see it!
Outlander is inviting the most innovative early-stage tech startups in the Southeastern United States to out-vision, outsmart, and outpitch the competition at OutPitch 2021! The live pitch competition winner will receive a $100,000 investment from Outlander VC on a $1M capped convertible promissory note! Read all of the Outpitch 2021 terms and conditions here.
If you’re the founder of an innovative early-stage tech startup headquartered in the Southeast, you are strongly encouraged to apply! The application deadline is 11:59 pm EDT on May 2nd, 2021.
The application request form is simple. Just send us your name, contact information, and the name of your startup.
Then, look out for an e-mail from firstname.lastname@example.org with the link to the full OutPitch 2021 application.
The full application consists of 14 questions, covering your contact information, co-founders, company description, location, product category, website, and pitch deck, and previous funding information.
Yay! We can’t wait to review your OutPitch application. Next, our partners will select the top six startups to pitch live to our top-tier venture capital investors and judges on May 18, 2021.
Best of luck!
To explain why our team here at Arena is so bullish on crowdfunding that we tied our model to it, I find it helpful to draw an analogy to another trend I’m passionate about: online education.
The early wave of online degrees and online universities created a stigma around online learning – people associated online degrees with a low bar for quality/prestige and with several well-known for-profit universities who didn’t have students’ best interests at heart. But the educational potential of learning online is extraordinary: data and machine learning improve students’ education in real-time and give professors magnitudes more information with which to improve courses. It can enable top universities – freed from the constraints of physical buildings – to scale their educational experience to everyone who qualifies (anywhere around the world) on a model that actually gets better the more students it includes (thanks to the amassed data).
The first startup I worked for out of college was 2U, Inc., an edtech company that is powering full online master’s degrees for top universities (Yale, Berkeley, Georgetown, USC, etc.). 2U has spearheaded the model of online higher ed that lives up to its true potential and empowers tens of thousands of students. Rather than being third-tier students, the students learning online via their platforms are full equals to peers on campus, with student IDs, campus gym access, 12-student average class size, student organizations, and class gifts to the university when they graduate. Their admissions criteria, learning outcomes, and job placement outcomes match or beat the statistics for on-campus students in the same degree programs.
Over the last couple years, crowdfunding has been making a similar shift from its early incarnations – which were not without some challenges – into a robust ecosystem capable of providing just as much value to entrepreneurs as the best alternative options (offline VC deals). While there weren’t the scandals that the education sector had to navigate, the early days of crowdfunding did raise valid concerns amongst entrepreneurs and investors. One of the biggest concerns was negative signaling associated with crowdfunding: “only people who couldn’t raise money from real investors would try this weird new crowdfunding thing”. There was a self-selection bias among the startups on the platform and the novice investors who participated – they were often participating online because they couldn’t access capital (or for investors, couldn’t access deals) elsewhere. While there were certainly exceptions – Naval Ravikant did bring other notable angels in to participate in some AngelList deals – there were systemic challenges that made crowdfunding unappealing to startups who had other funding options.
Crowdfunding campaigns, similar to Kickstarter campaigns in how they were run, took a lot of time away from the entrepreneur’s focus on running their business: campaigns necessitated cold messaging dozens (or hundreds) of random investors’ profiles, hoping their company’s profile page would “trend” and be featured on the homepage if enough investors took interest. And for all that work, a startup would get very little value from investors in return aside from the money itself. As tech investors know, money has become a commodity and the bare minimum to get into good early stage deals is to bring something else to the table that will help companies further. The challenge with a crowdfunding campaign was that not all of the participating angels offered additional value and those who did usually didn’t have a big enough ownership stake to roll up their sleeves and invest additional time/relationships into the company.
But like new models developed to bring online education into a new era, we are now in a whole new stage of crowdfunding’s evolution. There is zero question in my mind that crowdfunding in 2015 can be just as effective for entrepreneurs (and even more so) than the standard model of venture capital and angel investing. The tipping point was the launch of “syndicates” on AngelList – and now similar models on other crowdfunding platforms like Quire. Syndicates are like angel groups led by one lead investor who spearheads the sourcing and managing of deals in exchange for carry (15-20%, plus AngelList’s 5%) from the other angels who then participate with him or her. The syndicate invests in the startup as one entity and the lead investor (“syndicate lead”) acts as the one liaison, both for paperwork and for leveraging the group’s resources to help the startup with introductions, industry expertise, etc.
The syndicate model incentivizes strong investors to spearhead crowdfunding. Early hype around crowdfunding professed that online platforms would replace VC firms and professional angel investors, but that couldn’t be farther from the truth. Exceptional entrepreneurs will always want to work with exceptional investors who can help accelerate their business, and since startup investing is a “hits business,” any investor who want to see a return on their money needs to invest in the exceptional entrepreneurs. The path then for many angels is to participate in the deals of their most capable peers. Syndicates financially incentivize (on a performance basis) top investors to include others in their deals, and enable that lead investor to write much bigger checks than they alone can afford to.
Which leads me to a second critical point: good syndicate leads are bringing access to top deals that weren’t going to be on crowdfunding sites otherwise – that’s why backers are willing to pay carry (much like traditional VC Limited Partners would) to participate in deals they source. When top angels and VCs find a startup they believe can become a massive company, they inevitably want to get a large stake in it – incorporating an AngelList syndicate into their investment allows them to do that (instead of a $50,000 check they can invest $500,000 with 20% carry on the $450,000 others contributed). This creates a best of both worlds: entrepreneurs get to work with a top investor who is heavily invested in their success, and backers of the syndicate get to access deals they otherwise wouldn’t see. The entrepreneur can always tap into the contacts and experience of angels in the syndicate if they want to (part of crowdfunding’s promise) but without an obligation to interact with them if they don’t want to.
Crowdfunding syndicates aren’t displacing capable investors, they’re displacing traditional Limited Partners. For a top tier angel investor who wants to graduate into bigger checks and into leading seed rounds, the natural next step has been to raise a 10-year VC fund (with capital from family offices, endowments, and major financial institutions) – look at the rise of “micro-VC” firms. But AngelList syndicates are becoming a more flexible alternative to raising a fund: the platform handles most of the paperwork and the investor only has to do deals when they want to, incorporating the backers they want to have involved in that specific deal. Moreover, AngelList is an increasingly comprehensive financial ecosystem including multiple large fund-of-funds backing the leading syndicates in a similar way to how traditional fund-of-funds back VC firms, and including increasingly large and complex deals (like secondary investments into growth stage companies).
At Arena, we’ve built a hybrid model because it gives more flexibility to our check sizes and gives us a pool of several hundred angels from diverse background who we can tap to provide additional value-add to portfolio companies. We don’t operate our fund and our AngelList syndicate as separate firms – they are locked together and we always invest from both (which ensures neither fund LPs nor syndicate backers are ever pushed out of a great deal). For an entrepreneur, it’s just Arena investing – the fact that our capital comes from two sources doesn’t have to be any different than when a traditional VC firm invests using two funds (some remaining capital from an old fund, plus capital from their new fund). Numerous other VC firms have started incorporating crowdfunding into their investments as well, from Slow Ventures and Rothenberg Ventures on AngelList to betaworks and Index Ventures on Quire, and I’d expect numerous more to do so over the next two years.
Having to publicly share extensive internal metrics on their traction was also an early deterrent to top startups from running crowdfunding campaigns in the past, but many of the deals that syndicates do nowadays aren’t made publicly visible to all investors on AngelList. They are only made visible to approved backers of the syndicate. The syndicate lead can determine with the entrepreneur what information about the startup’s traction should and should not be shared with that group. Plus syndicates led by well-known investors – while they should always provide as much transparency to backers as possible – benefit from having a lead investor whose judgement and due diligence backers trust enough to still invest even if he/she can’t reveal much info at the request of the founder. Syndicates can even be run on an invite-only basis to control information further in the most extreme circumstances.
Crowdfunding has evolved substantially over the last half-decade and the model of AngelList syndicates has enabled it to at last go mainstream among top tier investors (and provide exceptional value to the startups and angels involved). The ecosystem to support syndicates – and the streamlined process for conducting them – becomes more robust each quarter. Over $100MM was invested over AngelList alone in 2014, and if their growth rates continue at the same pace it will be many times that within just the next couple years. The revolutionary impact of crowdfunding won’t be that it replaces professional investors, it will be that it scales the act of investing in startups and provides access to anyone around the world (who qualifies) to invest alongside the top professionals. For entrepreneurs, that’s an ideal situation: the full involvement of the same “superangels” and venture capital firms we respect now, augmented by the option to tap into an additional network of angels who are eager to help your startup if they can.