A16z recently brought together a group of early-stage CEOs to talk shop and learn from their peers who have successfully navigated the journey from scrappy startup into large growth-stage or even public companies. The event featured a series of interviews with experienced founders and leaders, who shared their stories and insights from several decades of combined experience running enterprise companies.
The interviews covered a lot of ground, but here are some of the highlights around hiring, firing, scaling, and succeeding at early-stage sales and marketing.
“One thing we’ve done is to think about how we did things in 2013, when the company started. I think what happens is a lot of smart people create awesome products, but then you go off and be CEO and you’re doing some other thing. And there’s no one in the company today that can actually repeat what you did in the early days.
“When you become a big company, cycles are so slow. Ninety-nine percent of the people you hire when you’re a little bit bigger are 1-to-100 or 1-to-1,000 people. They’re not zero-to-one people. So you need to create that environment of zero-to-one again for new products, and then hire people that are hustlers and jacks of all trades. They might do a little bit of product management, direct a little bit of code, get customer feedback and iterate quickly.
“We tried to go back and find those PhDs that created the project at Databricks. We hired them from the universities, and we gave them this hybrid product tech-lead role where they work with a few customers and build stuff for them. There’s a huge tax to build any software at Databricks — mostly around various compliance and security requirements — so we try to exempt these people as much as possible from those things so that they can incubate. And then we have them work very closely to make a couple of our customers super successful. Once we nail something for one company, we start applying to more and more customers and then we build the product out of it.
“Some of them fail, but that’s life. It’s tolerable if you’re running lean and being highly iterative.”
“I had started a company before Cloudflare with two other people. When I was looking around trying to find co-founders, I looked to people who I trusted and who I enjoyed spending time with socially. And so I literally started the company with two high-school locker mates. We were all kind of geeky wonks, we all had sort of a technical background, we all had sort of a legal background, all three of us were almost exactly the same age, we’d all grown up next to each other. And we spent the entire time fighting over who actually was in charge. Because, at the end of the day, we could all have done each other’s jobs. If it was a Venn diagram, all of our circles were totally overlapped.
“So when I was thinking about starting another company, the first thing I did was look for people who weren’t close to me socially, but were complementary in terms of they were really good at the things that I was bad at. Michelle and I were business students together. But I joke that if she had invited 40 people to her birthday, I wouldn’t have gotten an invite. If she invited 50, I probably would have — somewhere in that bubble.
“And we have done, I think, a really good job at splitting the world up into various pieces. Our third cofounder, Lee Holloway, was the technical genius. Michelle is the person who makes sure that the trains run on time. I was P. T. Barnum, saying, “We’re going that way!” There’s such an enormous surface area to cover when you’re starting a company that you want a little bit of overlap among the circles, among the founders, so you can communicate, but you want as little as possible so you can cover as much surface area as possible.”
“When you start to scale and get real revenue and you’re starting to build out your leadership team, founders too often make the mistake of not hiring executives who are better than them in an area, because you’re worried you’re going to get fired. You’re worried your investors are going to say, for example, “This person is better at sales than me, maybe I’ll get fired and they’ll just put that person in charge.” But that’s actually the fastest way to get fired — to hire someone who doesn’t have a complementary skill. What you want are executives who are way better than you in those areas.
“The reality is that everyone wants you to stay and win. Because the founder-led businesses that make it to that scale outperform ones where they have to bring in an external, professional operator.”
“For the first head of sales, the primary attribute I think generally you need to hire for is that the person is a sales killer — the person needs to be amazing in-deal. The best salespeople are able to spot the leverage point in the deal really clearly. There are all of these things that kind of matter in any given deal, and then there’s usually one or two or three that really matter. And great salespeople are able to spot the one or two or three that really matter.
“You also want somebody who’s going to be just a straight-up problem solver and get stuff done. Somebody that’s like, ‘Nothing is not my job. If I face any obstacle, I’ll figure out a way to overcome it.’ Because there’s so much problem-solving and overcoming that needs to happen at that point. The other thing is you’re usually going from a founder-led motion to trying to replicate that in some form or fashion. That’s a sticky problem that I’d rather solve in a non-scalable way first, and then figure out how to scale it afterward.
“When you’re hiring the leader for the next chapter, the thought process might be something like, ‘We’re doing great in commercial and mid-market, we’re not doing as well in enterprise. So, let’s bring in somebody who’s done enterprise selling — somebody who can be inspirational and set the culture that we’re looking for, and who’s more strategic and can see down the line and around the corners.’”
“I rehire everyone every day in my head. What I mean by that is it’s really hard for people, including founders, to make a decision to let go of someone they’ve known for a long time. But the reality is that you have to move people on. If they’re not a fit in their current role, you want to find them a different role or a different home. Or, they may be a fit when you’re 100 people, but they may not be a fit when you’re 1,000 or 5,000 people. So I have a simple rule, which is: Knowing what I know about a person today, would I hire them in that role today? It’s a very simple formula.
“It may seem a little bit cold, but I’ve never regretted getting rid of someone too soon. In fact, I’ve always regretted waiting too long. You have to really focus on whether they can operate at your current scale, and if they are the right fit for today. If they’re not, either you find them a different home within the company or you give them a hug on the way out, and do it with dignity.
“A big part of the lesson learned for me is that the people that got you here are not the people that are going to get you there. There’s just a different phase of growth that the company has to go through, and you do have to make some hard choices over time as you scale the company.”
“You have to have a lot of empathy for your employees; you don’t just want to be some heartless CEO. But you always have to realize what the truth is, and not lie to yourself. And you have to understand what the priorities are to make your company succeed, and then make those decisions. Sometimes, people lie to themselves or mix up priorities by saying something like, ‘I have this co-founder who’s COO, and we’ve been friends forever. It would look so bad if he quits, he would probably take these other people with him, and it might look bad on our culture and it would be in the press.’
“But you have to start from first principles: Do you have a kick-ass team that you can win this market with? And if you don’t, you have to do what’s in the best interest of your company. For us, honestly, the right thing was to replace the whole executive staff.
“You can’t build org charts around people — except if it’s that one genius who built the whole product and is still doing all that. With everybody else, you have to do the right thing for the company over the long term.”
“We were a little, tiny, scrappy Swedish startup in 2010, and then Google was breached in a famous attack named Aurora. It was nation-state attack, where they stole some of Google’s code and got access to Gmail accounts. I wrote my first business plan after Google reached out and said, ‘We like your product. We’d like a quote for 20,000 YubiKeys.’
“The plan was essentially that if I move my family from Sweden to California, we can conquer the world. We only need five companies. First, we need to win Google. And then we need to win Microsoft, Apple, Facebook, and Amazon — because they sit on the leading platforms, the leading browsers, and the huge user bases. And they have the same problem to solve. If we work with them, they can integrate our technology so it can work across all the services.
“But we had to get their feedback, so the product evolved together with them; that’s how we won them. We had no salespeople when we won Google. We had just had a focus on the mission and the technology. And Jakob, my husband and cofounder, actually got offered a badge at Google because he was there three times a week whiteboarding with them on how everything would be integrated in their browser and platform.
“We won the rest of the companies because Google put out a case study saying that Yubikeys resulted in zero successful phishing attacks, 90% support reduction, and were four times faster than a phone app — and, by the way, that they probably saved $100 million in support costs. I mean, it was an amazing case study and then, of course, Microsoft and the others wanted it, too.”
“Because of the economics of our business, we had to target customers that didn’t have a lot of money to spend on web security and performance. We basically got to $100 million in revenue with four people on our marketing team; we spent no money on marketing. But we made it so anybody could come to our website and sign up for our service, and we made onboarding so simple.
“We were free and $20 a month, but we ended up with a “Join our enterprise advisory council” button because bigger customers said, “I can’t pay you $20 a month; I will get fired if I only pay you $20 a month. Literally, I need to spend more money with you.” They were self-selecting into our enterprise advisory council, which became lead gen for internal people to reach out to them and start selling, at the time, $5,000-a-month contracts.
“It doesn’t have to be $100 million — it can be whatever is right for your business — but ask yourself what you can get to without a large investment in sales and marketing. And then layer in the sales folks and do all those things to go even faster. Our first sales leader took us from basically zero dollars in revenue to a billion dollars in revenue.”
“Early on, you’ve got to find ways to be clever, because you can’t outspend your competition. You’ve got to find something that you can do better than someone else. As a founder, you can have a personality — you should let your personality shine through. For example, everything under Matthew’s name on our blog is literally written by him. He does not have a ghostwriter, he writes it. Our CTO, who was employee 20 at Cloudflare, is also an extremely good writer.
“Having extremely high-quality technical content on our blog attracted other people who are good writers to come work for us. They’re like, “Will I be able to write blogs?” And we’re like, “Yes, please do. The more technical and nerdy, the better.” We have some great people who we wouldn’t have been able to hire if not for the fact that we let them tell stories on our blog. As soon as we realized the blog was an asset, it became a flywheel of its own.”
“In the beginning, we didn’t even think about who our blog was targeting. We were just like, “That’s an interesting story, we should tell it.” Today, we think of the audience as being the engineering talent that we’re trying to appeal to, but it turns out that those same people also are the practitioners. They’re not the C-level executives that own budgets, but they’re the practitioners that are in every organization that’s out there.
“Our brand stands for a lot of different things, but one of the things our brand stands for is technically smarter than you are. As a result, when you’re trying to think about the problems we solve, you’re going to be like, ‘Listen, they’re technically smarter than we are, so let’s use them.’ I think it helps us build the relationship from the bottom up.”
“One way that we’ve thought about brand is that it’s the personality of your company on display. What attributes do you want out there associated with your company? We looked at our key persona — for us, that’s a salesperson — and we said, ‘What does ‘cool and respected’ look like with that persona?’ Then we went through all the attributes for the person that everybody respects in the sales world and we said, ‘That’s going to be what our brand looks like.’ A lot of it was very intentional to resonate specifically with this part of the market.
“Because we were creating a category, we had to be very specific about the persona that we were going after. You need to stand out above the noise and make sure that the person that likes your message can then do something about it. One of the things that would happen, in both our marketing and sales funnels, is that if we got delegated to sales ops or sales enablement and moved away from sales, all of a sudden the person couldn’t find the budget, wasn’t nearly as visionary, and had a lower tolerance for risk — all of things that you need when you’re creating a category.
“So, getting super clear about your target persona is huge. The more risky and edgy the thing you’re doing, the more the person is going to need a very defined persona to be able to take you through and get something done.”
“A lot of companies, when they go international, will just put a salesperson and an engineer in a foreign city and see how it goes. The challenge with that is you just don’t have enough inertia. We did a little bit of that, and then we just said, “If we’re going to go into a city, we’re going in big and we’re going to invest. We’re going to put a whole bunch of people there, we’re going to put support and marketing there, and we’re going to have a level of gravitas in that area to be successful. We’re not going to go into a hundred cities.” So, today we’re 30% international, which a lot of big companies are, and we’d like to get to 50-50.
“But I think one of the big lessons is: Don’t dip your toe in the water and try to piecemeal international expansion.
“The second lesson learned is that lots of people in [other geographic markets] want to be a president and they come in acting as poobahs. Don’t hire those people. You really have to hire somebody that’s going to come in and actually roll up their sleeves, get the office going, do the work, sweep the floors, whatever it is. Over time they may not be the right person, but you have to hire the right people at the right time, not someone who wants to be, in our case, for example, the emperor of CrowdStrike in Japan.”
“Probably my biggest mistake in my time at Gong is when we decided that we wanted to go upmarket and start selling into the enterprise. What I did was I hired three senior enterprise folks, and I had them go out and try to figure out the market while closing deals. And 18 months later, most of the deals that were in the funnel fell out.
“What I’ve learned is when I’m making any decision, I need to ask myself, “Is this an if we’re going to do this or is this a we’re going to do this situation’?” If it’s an if situation, then I think you can take a more measured approach, like the one that I took. But the enterprise, for us, was not an if; it was not a question. And I took the measured approach in the wrong category.
“I think in those cases, especially with a go-to-market motion, you need to surround your salespeople with everything they need in order to be successful. And there needs to be a risky investment that you make at that point — either go all in on enterprise or don’t. There should have been a product marketer around it, I should have hired a CISO straight out of the gates, there should have been a PMM dedicated to the effort, I should have hired a leader who was focused on the thing. Instead, it was just three salespeople going, ‘OK, how fast can we figure it out?’”
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