Welcome to the DataFox Blog

10 Things That Change When You Stop Bootstrapping

Kristen Koh Goldstein, CEO and founder of Scalus, talks about what changes when you finally raise funding - the pressure to hire fast, the struggle to maintain culture, and the risks management teams face.

Over the next three days, DataFox will summarize the SaaStr 2016 panels. If you miss the tactical theater or strategy stage, are networking on the ground, or didn’t get a chance to attend this great conference, we’ve got you covered.

View all SaaStr 2016 panel summaries

Special thanks to Jason Lemkin of SaaStr for putting on this conference and giving us the chance to publish these summaries.

In a nutshell:

  • Complexity explodes exponentially when focus expands from building a product to building a company.
  • As hard as you try to prevent it, culture will change as your grow and battle rhythm becomes harder to maintain
  • You’ll have to help your team move from first-derivative work to thinking about scale.

Handling the hiring binge

Once you bring in venture funding, you’ll feel pressure to hire quickly. You have to resist the temptation to hire fast at the expense of quality. The entire team falls to the level of the worst employee, so compromising on quality has extremely adverse outcomes. The “hire slow, fire fast” mentality should still hold true when you have an influx of capital.

“The first time your terminated executive says he can't pay his mortgage or his daughter’s tuition, it'll crush your soul.”

Firing someone is gut-wrenching, but even if you don’t have someone in the pipeline to replace an underperforming employee, you should still let them go to create a sense of urgency to fill that position. Basically, don’t compromise on skill or culture just because you have money to spend.

The culture shift of a fast-growing company

As you grow your company, the culture will inevitably change from a tight-knit family to a more divergent village. Be sure to hire “bus builders,” not “bus drivers” - the former are proactive and output-focused, the latter are reactive and input-focused. That’ll be a main driver of culture going forward.

Present the mindset, then get out of your team’s way

As you scale, you should train your team to think big picture: look for opportunities for scale and systemic consistency, rather than one-off, first-derivative efforts. If your team can’t think big picture, they won’t be able to execute - and shared vision is what allows you to delegate effectively.

"The people doing the work have the best idea of how it should be done. Trust comes from the top."

Be clear about your vision and how you expect your team to tackle problems, and avoid being a micro-manager - a major risk for managers as they scale.

Finally, scaling is about consistency in product or service delivery. Consistency leads to repeatability, and repeatability leads to success. Quality may have been important early on to demonstrate value to investors, but consistency is what will allow you to scale.

Check out all of our SaaStr panel summaries here, follow us on Twitter at @datafoxco to see live tweets of the event, and visit SaaStr itself for more great content.