Founders are the captains of a startup, steering the ship and crew toward their vision of the future. Your relationship with fellow co-captains and the rest of your team will dramatically impact how efficiently and effectively the ship can progress. The stakes are even higher between co-founders, where soured relationships can turn into dissolved cap tables, hefty legal expenses in untangling, or even the company’s failure.

So, we asked the founders of the Outlander Community about their hard-learned lessons in failed co-founder relationships and advice for productively handling co-founder conflicts. Though all agreed conflict is inevitable, keeping the resolution process productive requires the same ingredients as any other relationship: clear expectations, proactive touchpoints, data-driven communication, and support from neutral third parties.

Step 1: Explicitly outline expectations

After messily parting ways with co-founders, many surveyed founders’ biggest regret was not catching misaligned expectations until it was too late. These founders were adamant about co-founders delineating their shared vision, values, and expectations before signing any contracts. United by more than money or clout, co-founders who rally around a shared vision, values, and expectations are less likely to implode from infighting.

For example, consider how aligned your answers are to the following questions:

Next, it’s time to codify your agreed-upon responsibilities and conflict resolution process. When conflicts arise, the legal agreements governing your startup will dictate what options are available. From your articles of incorporation to operating and shareholder agreements, these documents outline the rights and responsibilities of each co-founder, ownership stakes, decision-making processes, and dispute-resolution mechanisms. Safeguarding your legal rights and obligations in an operating co-founder agreement is a vital first step for equitable, productive conflict resolution down the line.

Step 2: Be proactive with routine co-founder touchpoints

While a shared vision can help anchor difficult conversations, it’s just as easy for such aspirations to get lost in day-to-day operations. With so much to juggle, surveyed founders recommend scheduling a routine co-founder meeting specifically to get issues out in the open regularly and addressed as quickly as possible. With frequent opportunities for direct dialogue, co-founders can address issues incrementally instead of letting them sour the working relationship.

For the co-founders of Heartbeat, establishing a standing co-founder dinner ritual has been paramount to preserving their working relationship. Every Thursday, they grab dinner and air out every annoyance, frustration, or problem that needs addressing from the past week. “Knowing we had this time each week ensured there were never any pent-up emotions,” explains Murtaza Bambot. “We got better and better at voicing problems and dealing with them together,” and ultimately, this ritual “created the best working relationship I’ve ever had with anyone.” 

A good co-founder dynamic boils down to good communication. By addressing conflicts routinely and directly, you and your co-founder can focus on building your company, not fighting.

Step 3: Use a data-driven approach to problem-solving

With your expectations outlined and routine touchpoints set, resolving conflict productively will boil what you say and how you say it. In difficult conversations, things can quickly become emotionally charged, so it helps to stay anchored in a shared value (i.e., your company’s mission) and lead with the facts. 

Using a data-driven approach to solve problems was the most frequent advice from surveyed founders, but with an important caveat: Don’t dismiss emotional responses in pursuing this approach. A co-founder’s emotional response offers valuable insights into their motivations, values, and more. Instead, name the emotions for what they are: a reaction to your interpretation of a situation. And, in the words of Michael Saloio of Huddle, “Conflicts don’t lie inside facts. Conflicts only lie inside our interpretations of those facts. It’s tough to create real solutions when the facts aren’t clear.” 

Here’s his fact vs. interpretation framework and how he taught his co founder and team to use it:

  1. Take a piece of paper and draw a line down the middle.
  2. On the left side of the paper, write down the facts about a given situation. Facts are ONLY things you can prove in reality: numbers, things someone actually said or did, etc. You’ll likely find that the facts are simple, and there aren’t that many of them. 
  3. On the right side of the paper, write your interpretation or the story you’re telling yourself. Two people rarely ever share the exact same interpretation, so this exercise opens up a discussion where people can share their experiences instead of arguing. You might also find you had a whole entangled story you thought was real, and it’s not.
  4. Create a new narrative by replacing interpretations with facts. Think of this as creating a blank slate. The goal is to move away from your individual interpretations of the situation and create a new, shared narrative so that you can move forward.
  5. Decide your next steps based on the agreed-upon facts. Suppose you acquired 50 new customers in Q1, and your target was 65. One interpretation of this situation could be: “We suck, we’re behind, I’m no good at this, it’s [insert person]’s fault, etc.” However, another interpretation could be: “Our product is showing a lot of promise, we’re so close to meeting our goal of 65, we’re moving in the right direction, etc.” After reorienting the conversation around the simple facts, the shared narrative and subsequent action plan could be: “We got 50 customers in 1Q. Our stated goal was 65. Based on what we learned, let’s reset our goals and try three new customer growth strategies.”

Other founders added that as you work to create a new narrative, focus on trying to understand your co-founder’s perspective, not winning the argument. If you hit a wall, pause and take a break from the conversation. When you reconvene, stay solution-oriented by anchoring your difficult conversations in your shared vision and values. Remind each other about what you’re striving toward. Dive back into the problem at hand.

Step 4: Bring in a third-party perspective

Often, co-founders get so deep in the weeds of a conflict that they can’t see the forest for the trees. That’s why you have mentors, executive teams, and board members: to support your business through issues like a complex co-founder conflict. So, if direct communication proves unproductive, it’s time to bring in a third party. 

For example, Renato Villanueva from Parallel suggests role-playing a difficult conversation with a neutral third party. With the unbiased person pretending to be your co-founder, practice delivering your feedback or approaching a conflict, seeing how your pretend co-founder reacts. Try a few different tactics to see which delivery avoids unnecessary escalation. Similarly, bringing a facilitator to help you and your co-founder find a mutually satisfactory resolution. Mediation can be a cost-effective and less adversarial alternative to litigation, preserving the working relationship and potentially avoiding legal battles. 

In some cases, co-founder conflicts may reach a point where an amicable resolution seems impossible. At this stage, it is crucial to consult an experienced business attorney before considering any legally binding decisions. A skilled attorney can provide valuable legal advice tailored to your specific situation, such as understanding your legal rights, obligations, and potential remedies, including co-founder exits. However, litigation can be costly, time-consuming, and may harm your startup’s reputation, so it should be your last resort to resolving conflict. 

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Co-founder conflicts can be challenging and emotionally charged, threatening the very foundation of your business. Though conflict is inevitable, the Outlander Community is full of founders who have been exactly where you are now. So, learn from their mistakes and get explicit about expectations, be proactive about co-founder conflict resolution, and don’t wait until conflict impacts the business’s operations to seek third-party support and legal advice to protect your rights and find a resolution.

Outlander VC invests at the earliest stages, which means that most of our portfolio companies are pre-revenue and pre-product businesses. All of these early-stage startups follow a similar trajectory: First, founders must turn their idea into a reality by building a Minimum Viable Product (MVP). Then, it’s mission-critical to get that MVP into your potential customers’ hands to test and validate. Based on this feedback, it’s time to iterate until you’ve built a product your customers are willing to pay for, and viola: revenue! 

Effectively developing your MVP into a full-fledged product requires a lot of prioritization. Rome was not built in a day, and your solution won’t be either. After advising countless early-stage founders through this process, I’ve distilled this process into three distinct phases: designing, building, and iterating. Here are the most important considerations and most common founder pitfalls for each stage: 

Phase 1: Designing

  1. First and foremost, understand the objective of your MVP. Think of your MVP as an experiment: its purpose is to validate your hypotheses and gauge market interest. As such, your MVP should be the stripped-down version of your envisioned product, containing only the core features and functionalities required to solve a specific problem. By focusing on the essentials, you can quickly and cost-effectively test your product idea before sinking significant time and money into product development.
  2. Quantify what “success” looks like before you build. To prove your solution is viable, define clear and measurable objectives for its initial iteration. The data you collect from your MVP will validate whether your product solves a real problem for your target market. These objectives should ladder up to your North Star Metric and will serve as your initial KPIs. Keep in mind that you will use this data to demonstrate the feasibility, viability, and early traction of your product concept to attract investors or potential partners. 
  3. With MVPs, simplicity is key, and done is better than perfect. In fact, your initial product should be somewhat terrible because it was built as quickly and efficiently as possible to get it into the hands of someone to give you feedback. You do not want to spend a year or two in development only to get it in customers’ hands and realize you’ve spent a long time building the wrong product. 

Phase 2: Launching

  1. Attract initial users. After you’ve built your MVP, it’s time to get beta customers to test your product and provide feedback. Move quickly to get your MVP into the hands of potential customers. Consider offering trial versions or beta programs to attract early adopters and gather feedback. 
  2. More users = more data. Be wary of spending too much time in stealth mode. Limited beta user access testing also limits the amount of data you can collect. I often hear early-stage founders say things like, “I have ten people on a trial right now, but I have a hundred waitlisted!” Why are those hundred people not on a trial, too? More people testing your product earlier gives you better data to build faster. 

Phase 3: Iterating

  1. Data-driven development is the key to growth. Establish continuous feedback loops with your users to collect insights and validate assumptions. However, do not lose the forest for the trees, and don’t act on every request. Instead, quantify the aggregate feedback from users and compare it to your analytics and metrics around user engagement, retention, and conversion rates. Leverage these data-driven insights to determine the best ways to enhance your product. When in doubt, always prioritize new feature developments by their impact on your North Star Metric.
  2. Balance scalability and stability. User needs will evolve with your product, so you’ll need to prioritize development efforts accordingly. As your user base grows, focus on optimizing your infrastructure and ensuring your product can handle increased demand while maintaining stability and performance. 

Early-stage product development is critical for turning your vision into a successful business. But the transition from MVP to full product will not happen all at once! Instead, you will gradually evolve your MVP into a full-fledged solution based on market feedback, scalability requirements, and business goals. And by following the steps outlined above, founders can effectively validate their assumptions, gather user feedback, and iterate toward building a robust product. 

Remember, the key is to get your product into the hands of users as quickly as possible, gather feedback, and leverage data to fuel growth and, ultimately, achieve your startup’s North Star Metric.

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.

Recruitment Dos + Don’ts

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:

✅ Define what great means. 

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

✅ Create benchmarks and systems for evaluating employees. 

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.

🛑 Try cloning a top performer. 

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. 

🛑 Force yourself into liking a candidate. 

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.

Retention Dos + Don’ts 

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.

✅ Prioritize onboarding.

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.

✅ Set clear expectations. 

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. 

🛑 Prioritize results > culture. 

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.

🛑 Jump straight to firing employees. 

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.

Organize for culture

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.

Challenges of a Virtual 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.

Optimizing a Virtual Storefront

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:

  1. Step 1 [>1% → 10%]: Once users land on your website, engage with them directly via chat, video, or audio. Personalized, synchronous communication methods increase the >1% conversion rate up to 10%. 
  2. Step 2 [10% → 15%]: Then, with the information gleaned from the conversation, marketers can personalize outbound advertising even further, bringing the conversion rate up to 15%. 
  3. Step 3 [15% → 25%]: When your sales team reaches back out, their outbound messaging will reinforce the groundwork laid in steps 1 and 2, bringing conversions up to 25%. 

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.

Outlandish Sales 101 x Eric Sikola

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. 

Brand loyalty vs. digital marketplaces

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.

Strapt’s win-win-win solution for CPG brands

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. 

Sampling <> data-driven marketing technology

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.” 

The new Strapt ecosystem

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. 

Ethnographic customer interviews

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. 

Field Guide: Unlocking your users’ dream product with ethnographic customer interviews

Step 1: Define your target audience

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:

FIELD NOTES:

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.

Step 2: Find and screen interviewees

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:

  1. How many trips with friends have you organized? Do you usually create an itinerary?
  2. Will you be able to show an itinerary from your past travels during our call?
  3. How do you usually get ideas for your trip?
  4. Tell me about your favorite travel story.

FIELD NOTES:

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.

Step 3: Conduct productive interviews

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:

  1. Set the scene — Provide context about your study and what you expect from them.
  2. Get the full picture — Ask them about who they are and the context of their life in general. What informs how they might currently approach your problem?
  3. Ask about their current solution — Have them tell you a story about the last time they had to tackle the problem. Are there tools they use? Who are the people they interact with during the process?
  4. Solve a hypothetical challenge — Ask them to talk you through their solution to step-by-step. Bonus points if they can share their screen and show you their process.

FIELD NOTES:

#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.

Step 4: Apply feedback to MVP + MVB

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:

  1. Summarize each interview — Recap the interview as if you’re telling someone else the high-level conversation points—this will help neutralize your biases.
  2. Note key comments or insights — Beneath the summary, include comments that speak to what’s important to users or is currently solving the problem.
  3. Bring in outside perspectives — Review and evaluate those insights with an unbiased party to identify themes/patterns that illuminate underlying causes of the problem you’re trying to solve.
  4. Form multiple hypotheses — For each underlying cause, brainstorm multiple hypothetical solutions to avoid oversimplifying the problems themselves.

FIELD NOTES:

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.

Context is key

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). 

Lost in the Forest vs. Lost in the Desert

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. 

Laddering Up to Your North Star Metric

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. 

For July’s Outlandish Speaker Series, Alex Camacho taught early-stage recruitment 101.

Watch the replay for all of his best practices for building successful early-stage teams or hit the highlights from our Q&A below.

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. 

Overview

Challenges of early-stage startup 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.

Best practices for structuring an early-stage startup recruitment funnel:

  1. Create a broad, flexible profile of your ideal candidate with the goal of finding the highest number of viable leads. The keywords here are broad and flexible, meaning your profile is not rigidly set in specifics. For instance, I recommend being as language agnostic as possible. If the person doesn’t fit exactly what you’re looking for but seems really sharp, adaptable, and autonomous, then keep in mind that the ramp-up time to get them up to speed might be shorter than the time it takes to restart a search to find someone with the specific skillset already.
  2. Build email marketing campaigns that are short and compelling. Begin with 2-3 sentences that convey traction; leverage growth metrics, impressive VCs or employees involved, etc. that will make them think, “This is a startup I cannot miss out on.” Follow with your layman’s pitch, which should answer 1) What is the huge problem your startup is solving? and 2) How is your startup the best positioned to solve that problem? Keep it short (~800 characters or less) and avoid vague cliches that could apply to any startup.
  3. Design your interview process to keep high-quality candidates engaged. Early-stage recruitment is a candidate-centric market, meaning the onus is on you to sell your startup to the high quality and in-demand candidate and not vice versa. Your ultimate goal is to convert somebody into a hire and feel good about what they’re bringing to the table.
  4. When closing the deal, remember that you are competing in a candidate-centric market to convert ideal candidates to employees. So make them an offer as soon as possible, and pay at a percentile that matches the percentile you want to recruit. High-quality candidates in the 99th percentile will be more expensive than the 50th percentile, and they’re going to have a lot more demand, so if you want to hire high-quality people, don’t pay the 50th percentile.

For more details on structuring your early-stage recruitment funnel, watch the replay of Alex’s live explanation of the funnel here [6m 49s].

Q&A

What is the one question you would ask above all others when hiring the first executive-level employee at a startup?

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.

How much equity should we think about for early-stage hires, and do you think it’s necessary to include it in all hiring offers? 

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. 

Our most significant recruiting pain point is the competitive recruiting market. So how do we incentivize long-term retention?

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! 

Our most significant recruiting pain point is finding executive leadership acumen with a startup operations mindset. So how do we find/connect to talent outside of Atlanta, such as recruiting from bigger markets like LA, SF, NY? 

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.

What are the best practices for recruiting inside sales?

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.

What are the best practices for recruiting co-founders? 

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:

  1. Setting Up Your Cap Table This could be called understanding Venture Economics 101: how to split up the equity among the founders, how much to allocate to a stock incentive plan, how to put your money into the company, and how much dilution you really can or want to have before you do a round of equity financing. 
  2. Forming a Delaware CorporationIf you are going to raise venture capital, you need to form a Delaware Corporation. You would be surprised how many Nevada, California, Utah, New Jersey, and other states limited liability companies and corporations we have had to convert into Delaware corporations. These conversions are always costly and have some degree of complication. Venture capitalists invest in Delaware corporations for two primary reasons: 1) C Corps are not “pass-through entities,” which allows the business’ losses to be used to offset future revenue for tax purposes, and 2) Delaware has the most developed body of corporate law in the country and a very specialized system of courts and judges, which is why the National Venture Capitalist Association (NVCA) bases their financing templates on Delaware Law. So, if you want to raise venture capital, you need to start with a Delaware C Corp.
  3. Founders’ Stock Purchase Agreements and 83(b)s You need an agreement to purchase the stock in your company, and if you have more than one founder, you will want the stock to vest in case someone leaves. This is done through a stock buyback and 83(b) election.  We see everything here from people not even having an agreement to purchase the stock to completely missing the 83(b) election, which creates real tax problems.  We once started a Series Seed and the founders were worried about the stock incentive plan being too big, but when we checked their paperwork, they had not even granted their own shares to themselves, let alone set up a stock incentive plan. Recently we had a startup that received a term sheet for roughly $2,000,000, but because they didn’t file their 83(b) on time, each of the founders would’ve needed to pay taxes on the gains of the value of their stock. In this case, that gain would have added up to a few $100k. Needless to say, the investor didn’t want their money being used to pay off each founder’s tax liability, which led to the deal blowing up. Filing an 83(b) on time is critical and could mean the difference between raising $2,000,000 and raising nothing.
  4. Getting Founders’ and Key Employees’ Intellectual Property Into the Company We once represented a football-game tech startup for one of the greatest quarterbacks of all time, and he had failed to license in the rights to his name and likeness for the virtual-reality game branded on his name.  You can’t make up some of the stories and scenarios that we have encountered.  But if the company does not own the intellectual property, then there is nothing there.
  5. Establishing a Stock Incentive Plan (SIP), Pricing the Common Stock Properly and Issuing Options or Restricted Stock Properly Employees, contractors, and advisors receive stock from the SIP, and often, startups use these options to compensate for a lower salary. What makes options so valuable to early employees is that their stock is valued at nearly zero since the company is not profitable. This could lead to a huge payday for these employees if the company is successful. However, if you don’t adopt the SIP at the beginning and you begin to generate revenue, you’ll need to conduct a 409(a) Valuation to calculate the value of that stock. This leads to higher valued stock, which is bad for employees receiving options. For example, if an employee had 100,000 shares valued at $0.00001, the exercise price (the price paid to own the options you received) would be $1. If those 100,000 shares were valued at $1, that employee would then have to pay $100k to exercise those options. The difference between $1 and $100k is glaring and a difference that most people can’t afford to pay. 
  6. Financing Properly With SAFEs and Convertible Notes In the early days, you will need capital and need it quickly, so financing the company with SAFEs or Convertible Notes instead of pricing the common or issuing preferred stock can save time and money and also avoid problems with raising the exercise price of the stock options.  Again, we have had founders price the common with sales to friends and families (which messes up the stock incentive plan) or lend the company a lot of money and have an investor get upset when that loan was repaid after a round of equity financing.
  7. Hiring Contractors and Employees Correctly This is critical, but again, I kid you not, we cleaned up a five-year-old tech company where the CTO, a contractor, had never signed a Confidentiality Invention Assignment Agreement (CIAA). Then, when a new investor asked him to sign a CIAA, the CTO held the company hostage for a month with salary demands as the company did not own its tech stack.

How do you accomplish the 7 things every startup needs to get 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! 🧪

© Outlander VC. 2022.