Why is management career track the only way for people to truly move up? I am not the only one who lost gifted salespeople, marketers, engineers, and other subject matter experts to “management.” Some burned out and left companies (often for the non-management roles), some stagnated in a management role, and others left the craft altogether. The makers, innovators, and passionate craftspeople deserve a career track that reflects their strengths. Let’s ask ourselves the questions:

• Is an engineer, who becomes a subject matter expert, puts together meetups, speaks at specialized events, promotes the company at conferences, publishes papers, contributes to patents and public projects is any less critical than the CTO?
• Is someone, who continuously architects core features one after another but does not want to manage people, less valuable than the Head of Product?
• How about a salesperson, who rescues quarter after quarter and pulls up the entire team with their deals? Are they less valuable to us than the Head of Sales?

The answer to me, and a rapidly increasing number of founders I speak with, is a solid No. Expert makers/craftspeople have as much value and importance to us as our leaders. Ten years ago, that was not the case, so this change excites me a lot!

The solution is at least a two-track/two-path system. How you structure it will be unique to the organization, culture, people, and goals. This post aims to help you think about how you could go about it, not provide you with the recipe for how to do it. This is also one of the “live posts” I am editing and updating as my thinking evolves with new lessons learned. When you start working on the system, you may discover you already have elements of it. You may find functional area leaders already have done structuring their teams behind the scenes with “shadow HR.”

Context matters

We are building and evolving a career path system to address the diversity of talent on our teams. Our context is to make everyone flourish on our teams by allowing them to contribute from their strength. We want our people to be themselves.

High-level tenets

Recognize a professional can bring high value to the company without many (any) people reporting to them.
Craftsmanship and subject matter expertise have the value and multiplier effect on the business comparable to excellent management and leadership.
We determine fitness for levels in each track by measurable, verifiable, and clear achievements. Education and tenure are not those measures.
A person can switch tracks since circumstances, priorities, and motivations change, which we should accommodate. Optionality breeds creativity.

6+ levels

I have observed two-track system doesn’t work well without at least six levels in each. In my experience, breakdown usually happened when we started recruiting outsiders for higher levels. 6+ levels provide the necessary differentiation and recognition. The company may not have employees at each level, which is OK since levels are not for the org-chart.

The tracks

Management

We focus on skills like the ability to organize, enable, mentor, manage, get buy-in from an ever-increasing number of colleagues. Notice introversion or extroversion have no bearing here. The ability to deliver results for the business in managerial functions is. The management track is for those good at procuring for the team’s needs, those willing to put themselves in the line of fire when things go wrong. In general, I have and seen other companies use the following levels: Apprentice (or Intern) -> Associate -> Manager -> Director -> Head of (or VP)-> CxO.

Expert/maker

We are focusing on the fluency/depth of the person. T and π personas. With each level, they become more autonomous, and at the same time, their expertise starts creating a gravitational field of knowledge. Every Staff level professional I have worked with made me feel smarter even after a coffee conversation. And those at Apprentice level display incredible curiosity and drive to learn. Levels I have used across most functional areas were: Apprentice->Junior->Mid->Senior->Lead->Staff

Compensation

There are many variables to consider here. The last couple of times I had to develop compensation packages for the two-track system, I pulled data from Radford, AdvancedHR, Payscale, Glassdoor, AngelList Talent, and usually had access to pay info from friends with access to VC data. Having the levels and exact requirements for them made it much easier to develop or update the plans. The hardest part was deciding how we will deal with employees located in different cities, states, or countries we did not have formal offices. Then we decided on which percentile of the market compensation we will stick to and committed to it across-the-board. The important part is being consistent and highly-disciplined.
Note: it is not out of line, in a two-track system, to see an expert track person receiving higher compensation than the most senior manager of the team.

Timing of raises, promotions, and compensation adjustment

You can either do “as requirements met” timing (this one was my favorite) or stick to a schedule of, say, March 1 and October 1. I tend to advocate for my favorite one because I like my teams in high cadence. It depends on your company culture and policies. There is no correct answer here, as long as it is suitable for your team.

“Up or out” or “let them be”?

Younger me would be all over the “up or out” from Deloitte and Arthur Anderson years. Not everyone wants to hit the cadence of development a highly competitive colleague may. Not everyone has the luxury of time to continuously educate themselves and move up. And that is OK. Compassionate leadership means you make room for everyone as long as they deliver on agreed-upon expectations.
For example, if your mid-level accountant has no interest in moving up and consistently meets expectations and produces, leave them be, let them grow at their own pace. The company is taken care of, and so are they.

Parting thought

Career development and growth are the responsibility of the professional. Adults are responsible for themselves. But learning does not happen in a vacuum, and the company benefits from the growth. Hence, the leadership team’s role is to provide the opportunity, tools, and support for growth.

Image credit: Ted McGrath

The post Career Paths for Startup Employees – Addressing the Need with a Two-Track System appeared first on In Pursuit of Scalability - Lessons learned from building 7+ companies. Actionable advice focusing on B2B SaaS, business operations, startup finance, legal, and talent management. By Apolinaras "Apollo" Sinkevicius

The average tenure of sales leader in SaaS and tech hovers right around 18 months. One or two bad quarters, regardless if there were macro issues or marketing stumbled – off you go! That never sat well with me because I started my career in sales as a talent agent in the entertainment industry, and I have respect for the sales craft. Even after I pivoted to my true passion for operations and finance, I have always positioned myself close to the sales teams. While projections, financial models, operational systems, etc., are areas of my depth, I do get involved in sales management more often than not. In earlier stage ventures, I found that if I build good foundations for the sales team, I can recruit an exceptional sales leader and help them succeed. Wouldn’t you know, if you are helpful, people are happy to build with you and share some of their tricks.

In this post, which will be part of the series on team revenue methodologies and processes, I want to share the team structure I worked on with my colleague Jamie Willson, a former VP of Sales at the company I co-founded – Robin. I liked what, when implemented, this sales team structure did to the team KPIs and the quality of the revenue (high NetRRR). While the version in this post may differ from what Jamie practices, I had retained key elements and adapted only ones I wanted to evolve further.

Structuring the sales team into the Sales Pods

Why Sales Pods? What are we trying to address?

1. While it is possible to build a strong revenue stream treating sales as an “individual sport,” I have found customers closed by and cared for by a team with, using the medical term, continuity of care had measurably lower churn and higher contract expansion.
2. Quota attainment can have wild variances, and it isn’t always due to individual talents. When team members are re-focused on how they affect the team, when they feel safe and motivated to share their knowledge and collaborate, quota attainment becomes more predictable and consistent.
3. When a team owns leads and customers, sellers do not engage in typical hoarding behavior. Hence, the usual issues with stale leads, missed deals, and underserved accounts aren’t an issue. There is a lot of power in collaborative selling. The final results reflect very positively in CAC and LTV.
4. The seller’s time and prospect’s/customer’s attention are limited resources. Given those limitations, any missed or inefficient sales activity has a negative and compounding effect. Team discipline tends to be a lot more effective than one driven by a manager.

The basics of the Sales Pods:

1. Sales Pods are comprised of sellers with clear roles, responsibilities, and timed sales activity. A straightforward process defines continued care of every lead, deal, or contract.
2. When scaling teams, Sales Pods are replicated instead of expanded.
3. Any process, methodology, training, or compensation changes are in sync between all Pods except for the experimental Sales Pod, where the whole team is clear on their role in a discovery mission.

Composition of the Sales Pods:

• Business Development Representatives (BDR) – these sellers may be contract/outsourced or in-house. 100% focus on outbounding and lead discovery. The role is optional if SDRs are outbounding 75% of the time or more. Caveat: only in-house BDRs partake in the team compensation pool.
• Sales Development Representatives (SDR) – 100% in-house role. Sellers in this role are responsible for pre-qualifying all the inbound sales leads and then filling the rest of their available time with outbound prospecting activity. 50%/50% inbound/outbound ratio is excellent.
• Account Executives (AE) – the moment SDRs establish product/prospect fit, AEs spring into action. Sellers in this role take the prospect through a sales journey to closed-won and then time-limited (30-60 days) post-close sales activity.
• Account Managers (AM) – these sellers take on a concierge role and are responsible for customer’s experience. AMs own the responsibility for retention, renewal, and contract expansion.
• With scale (or complexity of the product), Sales Pods may get dedicated sales engineers, customer experience, or onboarding representatives. I am a big fan of dedicating said professionals to Sales Pods because I can account for COGS, CAC, and project costs in general much more accurately.

Compensation:

• While your sales and compensation model may differ, the head of sales should have complete autonomy to adjust compensation as and when they see it most effective. Sometimes they will spend the budget, and sometimes they will keep a portion of it saved for a later payout based on special campaigns. Yes, when we need the sales teams to take on specific missions, like a push for more logos, contract expansion, new product launches, or other results necessary for the company’s situation. Those missions should have a separate budget.
• Variable compensation within Sales Pods, outside of special team missions, should have consistently shared ratios. We found 50% individual performance and 50% team performance ratio was a good split. If the process is new to the company, you may want to try a different percentage. 25% individual/75% team split during the warm-up to the process. 75%/25% split when the process and teams become mature and consistent in their monthly or quarterly performance.
• As mentioned earlier, the compensation structure between multiple Sales Pods should be the same, and so should missions for special bonuses. Different treatment of Sales Pods causes politics, lousy competition, and a toxic environment. Please don’t do it!

Details of continuity of care within Sales Pods:

1. BDR identifies a prospect or inbound lead comes into SDR. BDR/SDR enriches the lead information to the point for AE to confidently start the discovery and sales process.
2. AE takes on the lead, at which point we should diligently measure/time the process. Deals within prospect/customer cohort tend to close within similar timeframes. If at any point AE loses deal velocity, another AE may need to step in. Prospect attention is a very scarce resource.
3. Once the deal is closed-won, AE, in parallel, looks for opportunities to expand the contract while the customer is onboarding and is transitioning to care of AM. During this time of handover, we discover if AM is the best fit for said customer. Because the team is accountable for the customer’s care, culturally, there is less friction when we find out one AE may be a better chemistry fit with the customer than the other.
4. AE takes over the customer and is now a concierge for them for the business relationship duration. Contract expansion, customer satisfaction, new product introductions, renewals – the responsibility of the AE.

Note on accountability:

You probably heard the saying that the team recognizes the potential and discovers unfit members way before the manager can. Team members will feel more accountable and disciplined in an environment where a large part of their compensation depends on the team’s performance. At least, that is what I have observed.

The post The Sales Pods – Structuring Teams for the Best Collaborative Selling Performance appeared first on In Pursuit of Scalability - Lessons learned from building 7+ companies. Actionable advice focusing on B2B SaaS, business operations, startup finance, legal, and talent management. By Apolinaras "Apollo" Sinkevicius

While ARR is our “north star” KPI, it is an imperfect measure of progress, success, or company value. ARR does not tell the full story because it only shows quantity and not the quality of the revenue. As an operator, I rely on what I call “hero KPIs” to guide the financial models, budgets, projections, and strategic decisions. Hero KPIs save funding rounds when the ARR isn’t so hot. So what are those hero KPIs (at least for me)?

Before we begin, an important note: measure customer cohorts individually! There are core behaviors between cohorts that differ, and not only will these differences skew the blended metrics but also lead to suboptimal decisions. While I find company firmographics a helpful base to build upon, I have learned to pay particular attention to how the customer groups buy, adopt the product, and downgrade/upgrade the plans. 

Customer cohorts aren’t static either. A significant change in features or pricing will warrant reconsideration of customer segmentation. Just as you should look into re-cohorting with noticeable shifts in how customers spend, adopt, use, or expand.

Pull the outliers out of the KPIs and footnote when necessary. Yes, sometimes our KPIs look so much better with outliers we haven’t segregated out but then why lie to ourselves.

Hero KPIs:

Price consistency/median discount

While the median discount extended to customers within the cohort is a simple formula, the solution for maintaining and improving the KPI is a formidable feat. While (often) Heads of Sales may be significant influencers of the price consistency, they are not the sole ones. It is a fine team effort between sales, product, and finance. Heads of Product have the feature “dials” and package the right features addressing specific customer cohorts’ needs, making defending product value proposition easier. Heads of Sales instill the discipline and continuously adjust the compensation structure to focus the sales team on the right priorities. And lastly, Heads of Finance have the finance and legal “dials” that can provide the sales leverage. In the end, if cohort median discount extended is in low single-digit percentages – it is a strong team win.

Time to Complete Onboarding (TCO)

Not a KPI I see talked about much, yet we should treat it with high importance. How long does it take to the point when customers start using the product without assistance from the client experience team. TCO is the most sensitive period in the customer lifecycle because the lion’s share of churn in the 1st year is often due to slow or otherwise problematic onboarding. Large deviations in TCO within a cohort tell me we need to look at the documentation, onboarding process, and the team (if not self-serve). On the positive side, if TCO is going down gradually and is consistent across the cohort, that is worthy of a slide in the board or pitch deck. The sooner our customer is fully-onboarded, the sooner we can discover if we can add value for them and expand the account.

Net Revenue Retention (NetRR)

You may encounter this KPI with other names and abbreviations as NRR, NRRR, NetRRR, or Net Dollar Retention (NDR), yet it is calculated the same way: (starting MRR + upgrades – downgrades – churn)/starting MRR. NetRR by itself isn’t as powerful until we put it in the context of a month-to-month cohort analysis dashboard. Monthly NetRR cohort analysis holds the top spot in my KPI stack. Anomalies, variances, or consistent behavior – all early signals we can address. 

• Is the sales team “leaving money on the table” during the initial sale? Do we over-rely on pilots and paid trials? Is our value proposition clear enough for the customer to commit to us? 
• Are we doing a good job onboarding and then upselling? Are we reaching out at the right time to renew and upsell?
• Did those new features resonate with the customers and, most importantly, motivated them to upgrade?
• Is there a pattern of when we lose importance in our customers’ minds, and when is the right time to reach out?

This is just a sampling of questions NetRR analysis gives me.

Churn – Core Cohorts Only

While blended churn is a KPI often on top of our minds, I advocate for focusing only on the core cohorts. This focus requires we vocalize/admit serving non-core cohorts is a temporary cashflow-driven decision. While these non-core cohorts find value in our product, in the startup stage, the focus is essential. When non-core customer churns (or we gracefully churn them), it is beneficial for the company. Blending non-cores with cores is punishing the team for focus – counterproductive.

Are there other hero KPIs? Magic Number, Net Sales Efficiency, ARR/FTE, LTV/CAC are some of my favorites. Unfortunately, until we are closer to 4+ years of product/market fit, data is not good enough to obtain reliable numbers.

When it comes to tools to gather and deliver reporting for the mentioned KPIs, I would like to say Excel is no longer the dominant one. The most popular CRM platforms, like Salesforce and HubSpot, do provide base reporting tools. But I have found augmenting the reporting stack with SaaS analytics offerings, like Price Intelligently (my absolute favorite), Baremetrics, or ChartMogul, is a worthy investment.

This post is one of my “live ones” I update as I discover something new to share. If this is a topic that interests you, I would love to see you as a subscriber of my In Pursuit of Scalability newsletter.

The post North Star and Hero KPIs of SaaS appeared first on In Pursuit of Scalability - Lessons learned from building 7+ companies. Actionable advice focusing on B2B SaaS, business operations, startup finance, legal, and talent management. By Apolinaras "Apollo" Sinkevicius

It has been a year since the Black Swan event of the COVID-19 pandemic started shaking industries to the core. None of us have a crystal ball and can predict the future, but we must develop our thesis and get in action. 

Don’t let a good crisis go to waste.

“We’ve seen two years’ worth of digital transformation in two months.” Satya Nadella, CEO of Microsoft. 

My Future of Knowledge Work thesis’s core – we are not going back to “normal,” and we shouldn’t. This post is not a quick read, and I likely will update it as my thinking evolves based on data and observations. After all, I am an operations person, and I live in a world of continually filling in the blanks where data is missing.

Why (most of us) are not going back to the old normal?

1. Change that happened in organizational cultures is global. Even more conservative “office cultures” of Western Europe changed. A recent Wharton study found the percentage of companies with no flex/remote policy went from 85% down to 24%. In the US, 83% of employers now say the shift to remote work has been successful for their company, per December 2020 PWC study. The same survey found 85% of employees do not want to go back to the “old normal.”
2. The average total daily commute in major US metros pre-pandemic was somewhere around an hour and a half round-trip (see Geotab data). Think from the perspective of a talent recruiter. Do you want to be one recruiting for the company in the “old normal”? How much harder will it be to recruit great people when 87% would like the new hybrid world?
3. Productivity is back to pre-pandemic levels (while we wait for the Burau of Labor Statistics to release 2020 numbers, here is the UK one. That was predictable because, in any organizational change, there is an initial period of learning. Same mentioned Wharton study found 39% said they are as productive and 34% said they are more productive. Bet numbers are even more positive if we’re to talk to software developers, analysts, and other high-focus and precision professions. But, there is a BIG caveat – childcare. Parents had an extremely tough time during the pandemic. I hope when schools and daycares are all back, productivity improvement will be even more marked.

What do we need to think about changing/adapting to/addressing, and how?

Offices and infrastructure:

• Decentralization and global presence are the key ingredients to the next step in evolving the future of work. Change in the headquarters or regional offices’ purpose and size was already apparent years ago and will accelerate exponentially post-pandemic. We saw this years ago when I co-founded Robin – meeting room booking, desk-hoteling, and other office resource management platform. Companies big and small were expanding their global footprint instead of headquarters.
• Offices are not going away. The next step in the offices’ evolution is transforming into meeting, collaboration, and professional development spaces. Will offices remain the sites where most of the work happens? For the most junior employees – at this time, I don’t see how else we can make it work. For more seasoned employees – given what we have learned during the pandemic, I think the traditional office will no longer be where we will be producing the bulk of high-value work. 
• I remain bullish about innovation and education hubs like Boston, NYC, San Francisco, London, Frankfurt, etc. We will continue to see companies establish offices/headquarters, BUT we will see less concentration in a couple of typically hot districts and instead see dispersion to suburbs. Our people are moving, so should we.
• 5+ year leases are out. I would be reluctant even to sign a 3-year lease unless the total cost of it is in low single-digit % of our P&L. Unlike the days when Regus ruled the short-term/shared office space market, competition in the post-pandemic market going to be hot again, and so will our optionality. 
• The home office is now a necessity. I am not the only one who scrambled to turn a small empty room into an office a year ago. And not long after, we turned a room in the basement into 2nd home office. Families are moving out of large metros to somewhere they can afford extra space and daycares that don’t require a full-time job to pay for it. Single professionals did that before the families. Mid-last year Pew Research found roughly one-in-five Americans either have relocated due to pandemic or know someone who has. In my world of startups, that statistic is much more pronounced.

Talent recruiting and retention:

• Adaptability to talent migration becomes strategic strength. When I see sentiment and migration data from places like Redfin or “U-haul Index,” I embrace it. After all, I had more of the smartest people around me move out of Boston than move in. For the last 4+ years, I’ve gone as far as regularly looking up a list of net migration gainers and figuring out local labor laws, health insurance, local infrastructure, cell coverage, broadband providers, co-working spaces, and airlines with non-stop flights. Following the talent is worth the investment and often will lower the total cost. Financials I oversaw were the litmus test.
• Thanks to the early adopters of digital 1st/all-remote mode of operations, the tools, processes, and services are no longer in the early stages. The pandemic pushed SaaS companies and service providers in the space to accelerate product roadmaps at speed not seen before. A couple of years ago, it was a significant undertaking to spin up another US or international location. This is something that we can do much faster and cheaper already. Talent will drive the expansion and not the systems and bureaucracy.
• Compensation for existing employees will depend on your culture, and new hires may need to be in a different compensation structure. The period of change will require some flexibility. You may make some folks angry and some happy. What are common trends? I don’t have any adequate studies in my possession. Still, companies I respect and follow are paying local market, cost of living adjusted, or grandfathering (for now) compensation on the books, as they expand their geographic footprint.  

Leadership and management:

These two areas will have to evolve a lot. In a way, everything I wrote about to this point is trivial, compared to change we must take on with leadership and management. What are the core areas for professional leadership growth? 

• If servant leadership wasn’t part of the culture before, it will. The more senior the person, the bigger their mission is to unblock those under “their wing.” It will be a significant attitude change for many of us. What is our mission? What is blocking my people? Who or where I go to get the solutions for my people?
• Trust and enablement of autonomy need to be the new focus of managers. The old “walking the floor” or “follow the script” management was already breaking down with the knowledge workers. The more effective mode of communicating expectations, providing support, and giving employees the leeway to get results using their best judgment will increase employee engagement and lead to better results.
• To err is human. Google and Harvard studies found the highest performing teams were those that had psychological safety. Colleagues felt safe taking risks and being vulnerable in front of each other. This will become even more important in an environment that is a lot more asynchronous. Great read on the subject is this Harvard Business Review article “High-Performing Teams Need Psychological Safety. Here’s How to Create It.”
• Company culture is a sum of all people in the company. Maintaining the company culture is the most severe concern of managers in the new normal. Booze, foosball tables, game consoles, and other superfluous stuff doesn’t create or maintain the culture. I would argue it divided the team into demographic groups and fostered terrible habits. Shared mission, employee engagement, professional development – these are some of the elements of the cultural “glue” that will keep it all together.
• Trust, not tracking tools, drive productivity. I realize some may take the shortcut/crutch and try to use “productivity intelligence” tools. I won’t list any of them here because I don’t believe or support that approach. Those who feel tracked and “spied on” have lower productivity and will jump ship at the 1st opportunity. There are no shortcuts to good management.
• Because of new skills required and likely flatter organizations, many managers will need to move to individual contributor roles. We will need to re-evaluate professional development tracks and focus our people on developing expertise and depth in producing the work product instead of the management track. Too often, we created management roles for promotion tracks instead of expertise depth roles. We will be better because even pre-pandemic 82% (per Gallup study) lacked the necessary skills to do the job well, and about 50% of the employees left companies due to their managers. In the end, we may end up with happier teams and longer tenures.

In closing, I am excited about where we are going post-pandemic. Geographic dispersion will put us closer to our customers, closer to new and more diverse talent, and get us out of our bubbles. More flexibility with where we work will reduce time wasted in traffic, increase optionality for where we can live. I am also hopeful that the movement of talent will force states and municipalities to focus on infrastructure to attract said talent.

There are many unknowns and risks, but I choose to believe progress is a virtuous upward cycle. Onward and upward!

Photo credit: Dan Machold

The post The Future of Knowledge Work and the Post-Pandemic Workplace appeared first on In Pursuit of Scalability - Lessons learned from building 7+ companies. Actionable advice focusing on B2B SaaS, business operations, startup finance, legal, and talent management. By Apolinaras "Apollo" Sinkevicius

While it has been two decades since I lost my father, I still think a lot about the lessons he taught me. He was an incredible role model and shaped my views on being a father, husband, leader, businessman, and decent human. Two days of my life are deeply seared into my memory, and I want to share what I learned during those two days.

When I was a teenager, my father always used to say that the best indication of how well you have done in your life and people’s lives you have touched is by how many people pay their respects at your funeral. Sadly, several years later, his words came to fruition. We tried to keep the news of his death quiet because that is what he would have wanted, but much to my surprise, the word spread like wildfire. The next day we had droves of people streaming in to pay their respects at his wake. As the oldest son in the family and bearer of his name, I stood there for two days, greeting every person who visited. In retrospect, I was still in my early 20s, and I probably did not grasp the experience’s gravity.

I heard hundreds of stories during those two days. One woman (his former employee) came up to me and told me how he pulled many favors to get her son in to see one of the top doctors in the country. Her son was standing next to her. Another man told me how my father hired him when no one else would. This man went onto become a well-respected reporter. Many people also mentioned how my father always had his door open and found time to talk to people about their concerns. Stories went on and on, as did the lessons for the young impressionable mind. Lessons like:

• A good leader does not sit in an Ivory Tower and delegate. “The air is thin up there, and brown-nosing is rampant,” my father used to say. Good leaders are close to their people and care about every single one of them. They lead by example and are the first ones out on the battlefield.
• People either love or fear their leaders. You have a lot more impact if your employees admire your actions. Fear fosters resentment, and love encourages collaboration.
• Your employees are your tribe. Care you invest in them results in the resilience of your company.
• Being a business leader is not just about profitability. It is also about changing the lives of your employees for the better! Put your people first and the value your shareholders will follow!

And yes, when you are dead, people no longer owe you, so they come to pay their respect to you because they want to. Life is about leaving a big wake of lives changed for the better.

P.S. Please check out my other article, “12 Rules of Business I Learned From My Father“.

Photo credit: Aivas

The post Leadership Lessons I Learned at My Father’s Funeral appeared first on In Pursuit of Scalability - Lessons learned from building 7+ companies. Actionable advice focusing on B2B SaaS, business operations, startup finance, legal, and talent management. By Apolinaras "Apollo" Sinkevicius

Any growing venture is hard. It does not have to be a startup, it could be a lifestyle or a mid-size business. The faster the growth, the more extreme are the swings and tensions. It is way too easy to lose sight of what matters, end up with agenda, and kill your relationship.

So how do we survive and thrive?

It all starts with empathy. The more the person you should be supporting is different, the harder it is for you to relate and understand where the other person stands. You are ineffective without empathy. So it would help if you tried to gain an understanding of what is affecting your colleague. Maybe something in personal life is bothering them, or they are at the edge of their wits at work, or maybe there was a string of setbacks or lack of progress, etc. You have to care about their pain to be effective. There will be a day you will need their empathy.

What you may think are variables within their control might not be the case at all. Let me use sales as an example. There are certain times in the year (usually clustered around holidays) when hitting those sales numbers might be much more challenging. Your thinking that if this person “makes the calls, they will make the sales” may make sense during your typical month, but not when the school is out, or storm screwed up daycare plans, or the market developed some macroeconomic fears. Understand and embrace that. Then you may end up with a much clearer view of what this person can affect, and that is where your help and motivation are most valuable.

Create new options instead of poking holes. I know I sometimes really stumble on this, being extremely pragmatic. Criticizing is the easiest option with the highest social cost. You can insert your opinion until your face is blue and do nothing but waste time and cause further demotivation. Likely, if this person knows their craft, they already introspected and are dealing with the issues. To be most effective, you have to create new options. Think of new concrete suggestions you can provide. Maybe this person was so in the weeds that they couldn’t see that one additional option you noticed. Be generous with help. You may not always get the credit, but you will always gain appreciation. At the end of the day, having someone to go to is invaluable when you are stuck.

Dismount that “high horse.” The biggest fallacy is to assume the other person has an easy problem. Likely that is just an opinion not based on actually doing the job. And if you think the problem is easy, get off your high horse and get your hands dirty. You don’t get to say “that is an easy problem to fix,” one doing the job is the only one entitled to make the statement. Either help do the job or move along.

Look for wins other person is not seeing. If you ever read “The Progress Principle,” you know how important it is to recognize even small milestones/wins. Recognition breeds motivation. When you are “in the weeds,” you lose sight of your wins because survival instincts kick in.
Conflicts are not inevitable. Conflict, at times, is good between people who respect and value each other. But in the end, if you are in the same battle together, compassion goes a long way.

The post The Hardest Skill To Master – Empathy appeared first on In Pursuit of Scalability - Lessons learned from building 7+ companies. Actionable advice focusing on B2B SaaS, business operations, startup finance, legal, and talent management. By Apolinaras "Apollo" Sinkevicius

The day-to-day execution and administration of a business often take an excessive amount of time, so the primary reason to augment your team with an Operations Executive is to maximize your CEO and other co-founders’ contribution to the enterprise.

I firmly believe that staying true to a vision is best achieved by having a founder as CEO. It is almost always preferable over “hired guns” that can help you execute on the vision but seldom understand it as well and are often too pragmatic. That said, a management hire can be very much a champion of the vision and a true partner with the founder. Good managers are seldom unreasonable, and it takes “unreasonable people” to do the sorts of great things that normal reasonable people wouldn’t consider until you showed them enough proof that it can be done. For that reason among others, boards should try as hard as possible to keep the founder in the No. 1 slot with a good president/COO or an otherwise strong execution team under him or her. This will preserve their instinctive feel for the new space and the new rules.

Legendary Silicon Valley investor Vinod Khosla, the founder of Khosla Ventures.”

In my experience, the overwhelming majority of the first-time founders never knew they needed an Operations Executive until they almost got replaced by the board or scaling of the business ended in a down-round. Usually, either their investors, the board of directors, or advisors were the ones who insisted they get one.

What are the signs that your company is ready for an Operations Executive?:

• CEO spends more time in the business than on the business. Day-to-day execution may not be as much of an issue with five people on the team. Yet once the company starts scaling, day-to-day issues soak up disproportionate attention from vision, product, and outreach. 
• Operational execution requires a skillset and pattern recognition that is often the polar opposite of what creating innovative/competitive products and leading the vision of the business requires. Said difference becomes very apparent as the company starts to stall in product development.
• The most capital-efficient way to scale is by avoiding repeating the mistakes others have already learned. The experienced operator brings a large toolbox and library of best practices learned through mistakes paid for by others. 
• If the company is landing major enterprise customers, the company must possess sophistication to service said customer. Learning to execute from scratch with Fortune 1000 customers is skydiving with just parachute material and a sewing machine.
• In cases where the company has several co-founders, the pragmatic operator is the balancing force necessary to keep the team operating effectively.

How about timing?

Like with the independent board members, founders should bring in qualified operations executives before they prescribe one. By the time CEO receives direction to get COO/CFO, the power balance has already tipped in an unhealthy direction, and overcoming the friction with the Board and investors will be that much harder.

What should you look for in an Operations Executive?

I have several related articles on the subject:

What To Look For In a Chief Right Hand Person (COO, VP of Operations)

Common myths are about Operations Executives.

Have questions or comments? Just hit me up on e-mail or connect with me on LinkedIn or Twitter.

Photo credit: Thomas Fuhrmann

The post When Is the Right Time to Hire an Operations Executive (COO, CFO, or VP of Operations) appeared first on In Pursuit of Scalability - Lessons learned from building 7+ companies. Actionable advice focusing on B2B SaaS, business operations, startup finance, legal, and talent management. By Apolinaras "Apollo" Sinkevicius

Before an incredible mentor helped me discover my love for the craft of operations, I started my sales career as a talent agent in the entertainment industry. Some of us have it, and some of us do not. Hence I discovered I was much more effective at figuring out how to support sales teams with systems rather than the art of dealing with people like me on the other end.

So what Darth Vader got to do with sales? I blatantly borrowed the term from one of the members of the Boston startup community – Matthew Bellows. I once went to see one of Matthew’s stellar sales leadership presentations and found the terminology spot-on. Matthew said there are two personality types you have to work with to close a sale – Champions and Darth Vaders. Champions will guide you through the organization and often facilitate your efforts within the company. Darth Vaders, on the other hand, will question you and be skeptical, most likely because numerous past experiences have made them who they are. You see, Darth Vaders get hit up by sales pitches every day from the early morning until late at night. They are allergic to sales tricks and are not interested in making your job easy. Every business has to have both Champions and Darth Vaders to have well-balanced procurement.

I am usually that Darth Vader. The procurement of resources, tools, etc., is my job. And my passionate protectiveness of my people, teams, and our finite resource (the money) only makes me a more hardened skeptic.

Here are the 7 rules from the other side of the table that will make you a lot more effective with the hardened types:

1. Do not waste our CEOs’ time! Clogging the email or voicemail box of our CEOs gets you nowhere. Not only is their inbox already full, half the time, our CEO has no idea what you are selling. If we told you “no” and you decide to go over us to our CEO, even if you get lucky with one sale, it will be your last with us.

2. Treat our gatekeepers like they are the CEO of the company! Not only are they our eyes, ears, and hands, but they are also our multipliers. Do not just focus on getting past our gatekeepers, instead recruit them to your side and turn them into your Champions.

3. Be honest! If you tell us nonsense, like you have no competition, or cannot tell us where your competitors are better, you lose any chance of a positive rapport. We are very loyal to honest vendors. That goes for both commodities and premium products/services.

4. Be human. Be you. Please! Since we get hit up with cold calls and emails all day long, we can tell who had sales training. Consultative selling, Challenger, AIDA, AIDCA, Sandler, etc. – we know when you are running each technique on us, we likely had the same sales training at some point in our career. Letting script take over the natural you causes distrust. 

5. Keep your word! This is one widespread complaint! Deliver what you promised when you promised. I would say about 75% of sales pitches I have experienced lacked proper follow-up.

6. Listen a lot more than you speak! Ask us questions that set the context first, then delve deeper into our needs/pains. Your outsider perception of our need/pain is likely way off. 

7. Do your homework! Look at our websites, media articles, D&B (which has more info than we want out there), and social media presence. It is unlikely you will get to talk to the Darth Vaders until you a vetted by gatekeepers, so you should know a lot about our organizations. The more you know about us before you call, the more we will feel you invested in us, and this does make us want to talk to you. If you were respectful to our gatekeepers, they might have already provided you with a lot of very relevant information.

Photo credit: Helmut Edlmayer

The post 7 Rules for How to Sell to “Darth Vader” appeared first on In Pursuit of Scalability - Lessons learned from building 7+ companies. Actionable advice focusing on B2B SaaS, business operations, startup finance, legal, and talent management. By Apolinaras "Apollo" Sinkevicius

NOTE: please see an updated article, “What do operations people do,” outlining differences between business, technology, people, sales, and marketing operations.

I have been in the craft of operations for two decades already. I have run ops in SaaS companies, digital agencies, custom software development companies, talent agencies, e-commerce companies, and professional services firms. What operations people do is often consistent industry to industry. Hence I find it very important that those in other functional areas have a correct understanding of what we do to work better together. In this post, I am going to focus more on misconceptions more common in tech. If I am talking to an engineer, software developer, or other techies, they automatically assume operations are purely a systems management role. The role in question is sysops or devops responsible for managing technical systems and deployment of software. In the “old days,” we used to call the role systems administrator or network admin. Unless one specifies they are referring to technology operations, people should always assume they are talking about business operations.

So what do the business or just operations people do? The head of operations (be it COO, VP, or Director of Operations) is usually responsible for coordinating and managing the vision’s execution and the roadmap developed with the CEO and the board. What does that entail? Most heads of operations will oversee everything from talent management (HR) to finance, forecasting to infrastructure, technology operations (unless there is a CTO in place), to customer service. Depending on the operations leader’s company and capabilities, other functional areas may report directly to them. Lately, COO and CFO roles have become interchangeable, but that is the subject of another post. As operations professionals, we pride ourselves on our ability to conduct this orchestra, serving every functional area, protect the organization and the resources available, solve problems before anyone catches wind of them.

In business operations, our prime KPI is the success of all functional areas.

Photo credit: Leo Reynolds

The post Defining the Difference Between (Business) Operations and Technology Operations appeared first on In Pursuit of Scalability - Lessons learned from building 7+ companies. Actionable advice focusing on B2B SaaS, business operations, startup finance, legal, and talent management. By Apolinaras "Apollo" Sinkevicius

After eight years of parenthood, as I am updating this post, I can say nothing can truly prepare you for being a new parent and entrepreneur. Just the new role of a parent is hard enough, yet many of us are also building companies and careers simultaneously. The realization that this little human will need all your support for a long while wakes up that instinctive hustle you are very unlikely to have felt before. But for me, there was also payroll to meet and deep commitment to the colleagues who trusted me enough to join the risky journey.

So what are some of the essential strategies I have learned?

• Take parental leave at least for a month. While you may have been a cognitive superstar before, you will be like a hung-over college freshman for several weeks. Sadly, this is only relevant in the US. A lot to be said there, but I will keep it to myself this time around.
• Without a strong partnership of equals between you and your life partner AND an alignment of values with your business partners, (co)founders, executives, and team, it is a Sisyphean undertaking. While it is vital to surround yourself with an army of supportive people, do not be discouraged by the detractors. There will be your share of doofuses, who will be asking why you are leaving the office at 5 PM (because daycare closes at 6!). They are the same ones doing absolutely nothing to help you, as you are working basically around the clock. Focus on the helpers, brush off the fools.
• Be wary of your biases and do not over-rely on experience or expertise. Even with 2nd or 3rd kid, it will be an endless number of lessons to learn. Look at your child(ren) and draw inspiration from their unrivaled curiosity; mirror it and learn from it. Overcoming the curse of knowledge makes you see opportunities and solutions where you thought there were none.
• You will make mistakes – lots of them. Be kind to yourself. It will seem like there is no end to them, but just like your child had to fall on his or her bum a lot before learning to run, so will you. If you are learning and progressing, you are doing it right. Progress is the focus.
• AXingtreat yourself, and make sure you keep the context of this being a marathon and not a sprint. Perfection is the enemy of progress, so I hope you let things slide from time to time. People will understand if you communicate.

As a closing thought, I wish I could describe the amount of energy and drive the parental journey gave me. Yet, none of the wins I treasure would have been possible without the support and understanding from my highly-driven scientist wife and the patience of my kids.

The post Parenting and Startups – Struggles, Biases, Lessons Learned appeared first on In Pursuit of Scalability - Lessons learned from building 7+ companies. Actionable advice focusing on B2B SaaS, business operations, startup finance, legal, and talent management. By Apolinaras "Apollo" Sinkevicius