Journey of a Founder: A Startup Story
Welcome - I’m a hands-on startup fractional COO (Feldspar, Synervoz), sales coach (Microsoft), and mentor (Alumni Ventures, High Alpha). Over 20+ years, I have applied my growth and operations experience to help dozens of startups (Axiom, IAN, Spartan). I helped build one high-impact to exceed $100M in revenue and a second to close in on that rare millestone.
Introduction
This is a lightly edited transcript from our “fireside chat,” a live startup event co-hosted with Jimmy Malik, including guest founders David Zamarin and Zak Allen.
The timestamps in the transcript synchronize with this edited audio of the event.
John: [00:00:00] Let's get started with some intros. Beginning with myself, I'm John Gauch, a five-year startup fractional COO for companies like Feldspar, FreshAhead, and Synervoz. I'm an occasional sales coach and mentor. Over 20+ years, I've applied my growth and operation skills to help dozens of startups like Axiom in the legal space and Spartan in consumer. I started my career as a tech lawyer in New York City. I developed myself in business roles after that. So far I've been lucky enough to help build one high-impact startup to nearly a hundred million dollars in revenue and a second to exceed that mark. I love serving founders through my work and I'm excited to be here. With that, I want to turn things over to Jimmy.
Jimmy: Great. Thanks, John. Hey, everyone. Jimmy Malik. I'm an operational strategist and growth leader, so I specialize in helping founders develop and implement operational strategies to drive scalability and sustainable growth. [00:01:00] I've worked across multiple industries, government, finance, healthcare, technology. I work with startups now to streamline execution, optimize their resources, navigate the complexities that they face in scaling their organizations. One of the things that I feel drives success across startups is those early hires that help you cement the culture and create an atmosphere that entrusts your values and your mission leading to your scalable execution. I'll turn it over to our founders. Why don't we start with David?
David: Hi, everyone. My name is David Zamarin. I'm the founder and CEO of a company called Detrapel, which is the parent company of three brands, called ProofPlus, Impermea Materials, and Detrapel Solutions. It's a company that I've been running for over 11 years. I started when I was 15 years old and the company has grown quite a bit. [00:02:00] So you'll get to hear a little bit about that. We've been on things like Shark Tank in the past. All the way through scaling up the business and now being a very large industrial company.
Zak: Awesome. I'll go next. Hi everyone. I'm Zak Allen. My background is at the intersection of real estate and software. I was early at Flyhomes and, as well as Hearth, building up those companies from zero all the way through Series B, leading the tech and engineering efforts there. I also co-founded a company called Homemade, and I'm working on a new venture as well. But based in Austin and I love the intersection of the kind of physical built world with the software world as well.
Inception to Seed
Jimmy: All right. Thank you guys. So I'll kick us off here into our actual discussion. And as David mentioned, this is more of a dialogue discussion where we're not gonna—it's not death by PowerPoint or anything like that. We do have a few slides just to help narrate and summarize some of the key points that we're making as well as our founders. [00:03:00] So let's just get into it right.
So, as many of you can probably attest, the beginning of the journey of being a founder is exhilarating, right? The moment when inspiration might strike when you first sketch out your idea, when you share it with someone who gets it. You fast forward a few months, and suddenly, things are starting to fall in place. You've validated the problem, maybe even built out a prototype, and attracted some early believers. And then the big moment. You raise that first, your first round of funding. It feels like a win, which it is. But there's the, here's the thing, right? The funding just isn't the finish line. It's the starting gun. And this is where the real work begins. The shift from, "I have an idea" to "I'm building a company." And that's what you're, that's what we're going to dive into now. What it actually means, between the inception and seed, and how founders navigate the uncertainty of this phase.
So the early days are really more about the excitement of [00:04:00] funding. In this phase, what we call inception to seed is where the foundation is laid, where you start asking and answering some really critical questions, such as have we truly identified a problem worth solving? Are we building the right solution? And does the market opportunity align with the long-term vision?
So this is where you may go from "this could work" to "this is working" or "it's not working." At this stage, there are three core areas. So John and I, working with founders, have distilled this down to three core areas, which we think are really important for this phase: validating the problem and refining the solution. This means getting out there and talking to real users, stress-testing your assumptions, and making sure you're solving something people genuinely need. You're also building an early product, which might be a prototype, an MVP, in some cases, even a well [00:05:00] structured conversation or, excuse me, a well-structured pitch that gets people excited, and you're also figuring out your early business model, right? Can this actually be monetized? Even if this is a need, are people willing to pay for this? Is there real demand? Are there others, competitors, others that have figured out how to do it better?
As you might guess, none of this happens in a straight line. It goes all over the place. You take detours. You may even hit some dead ends, and then you'll have some breakthroughs. All right.
So some of the biggest hurdles that founders face in this stage I would say are validation versus reality. So how do you know you're solving a problem that people will pay for building credibility? Investors, early employees, early customers. How do you get them on board and the first hires? As I was saying, the first hire is you're building a team. There's no company culture yet. So how do you find the right people when your startup is still more, a little more or less still a vision, [00:06:00] right? You don't want to, you don't want to start hiring your friends.
And then, the bridge.
The bridge is what we call what you need to do to get from the initial stage into the next stage. Moving from inception to the actual seed, it's about building momentum, right? Founders who win here lean heavily into their customer discovery. So constantly testing, iterating, and finding a product based on real feedback.
And they show early signs of traction. Whether that's increased user growth, revenue, or just strong engagement, even if it is still scrappy. And they're able to craft a strategic narrative, right? What a compelling story that investors, hires, and customers can rally behind.
And I can't stress this enough: where I've seen founders and startups where they have an amazing idea to solve a critical problem. But they can't tell a good story. So it leaves customers and investors scratching their heads in terms of what is the actual outcome of something like [00:07:00] this.
Now rather than just talking in theory, let's bring in, let's talk to our founders and see what they think. Dave, let's start with you. How do you navigate this phase, and what are some of the biggest hurdles in validating your problem and convincing investors you're onto something here?
Founder Experiences: Building a Customer Trust System
David: So it's a lot harder said than or easier said than done. I think the biggest thing that most investors will look for, whether that's an institutional fund, a CVC or corporate venture capital arm, or an angel investor in the early stage, is primarily they're focused on your team. The second thing they're focused on is whether or not you've found product market fit, and in the earlier stages, it's pretty easy to assume that you have not just yet, and that's okay.
What they're looking for and what you as a founder need to be obsessed with is validating that you've built the right product that will address multiple needs across multiple customers. [00:08:00] And the easiest way to do that is to have an infinite feedback loop with your customers.
As you're building, you have to get rapid prototyping, rapid feedback from your customers in real time, build a product that would solve their needs, then take that to another customer, maybe simultaneously, and see if those needs are identical. And if not, that's okay. See how you can blend those two.
And as you're getting all of this feedback, you're also building a trust system with these customers, who then could also advocate for you when it comes time to do due diligence in your fundraising, and you will be asked for customer attestations.
Those are the typical early-stage things that I think are often said, and most people would say that they're doing that or they have done that.
The truth is that you never have enough because the more people you have who have used or have put feedback into the product will be those early adopters who can speak for you and speak towards the technology and how much they're willing to pay for it [00:09:00] and essentially define the market size for you and for the investors when they're doing their diligence. That's what I would recommend.
Zak: Just to expand on that, that's great foundation, I think in order to get those early adopters, you can't be afraid of launching too early. There's a saying where if you're not embarrassed by the first product that you launched, then you've launched too late.
And in theory, you could be building your lead list, trying to see what the ideal customer is and spending six months just building something. But if you're in, if you're doing that in isolation, then you're not actually proving you're doing anything. You're not actually proving that demand. You need to launch as early as possible. Get customer feedback. Odds are that the actual product that you end up getting traction on is a couple of pivots away from that first version that you go with.
So getting customer feedback and what Dave was saying around, having their, that customer trust and almost like building like an initial early adopter, like an advisory panel of customers, is super key here [00:10:00] because a lot of VCs and a lot of investors will directly speak to those customers to get their take on the product or their early versions of the product.
That's super key.
One strategy and this is coming a little bit more from the software side of things is design partnerships are is a really great asset on this front. To prove demand for something before you've actually built something.
What that entails is you pick an ideal customer that you want to work with. You approach them with this like design partnership agreement type document. And what that basically says is, hey, if we build you this in the future, will you pay for it in the future? And it's a nice kind of letter of intent to get them to solidify what types of features that they would want to be included as part of the MVP.
And there you go, there's your product roadmap. Design partnerships are a great way for you to validate your product roadmap and really show investors that you have some demand for the type of [00:11:00] product that you're going to build.
Yeah, I think iterating fast and keeping close with customers are the really big takeaways at this stage.
Q&A: The Criticality of Storytelling
Jimmy: Awesome. Thanks, guys. John, do we have any questions?
John: Yeah, we had some questions from folks when they registered. Pulling people into the organization, the right people, talented people, can be critical. Can you speak to what it took to bring someone who ended up being extremely valuable to you and your work onto your team? How did get the first couple of people who made a really big difference?
Zak: I think on this part this is a little bit where the storytelling comes into play, especially at this stage. A lot of times you can't rely on metrics or the amount of revenue that you had in the past six months because you didn't even exist six months ago. You really have to be a good storyteller.
And this is a key here, too, on the sales motion is it's you don't want to hire a salesperson too early. A lot of your [00:12:00] sales should be done by the founders, and you're basically practicing that sales motion both for your customers and for your early employees as well.
Really having a great story and a mission to align. You're not, especially if cash is limited, you're not going to be able to compete with the large tech companies in terms of salary or base comp or anything like that. So you're going to have to sell the story and sell the mission. That's something that you'll need to practice a ton in order to get right.
John: Yeah, that totally makes sense. Do you want to jump in with a thought there, David, or I have other questions too.
David: No, I think Zak hit the nail on the head.
John: Okay, so here's one that may be hard to answer. But what's something that you did, or you've seen people do, during this phase in your business's growth that like was a really bad idea. What was a mistake you made, time you spent, a decision you made, what was something that in hindsight you say, "Oh my God I hope no one ever does what I just did."
Zak: I've one that comes to mind right away. At Hearth, we hired a [00:13:00] customer success rep before we had any customers, and so unfortunately, when we had zero customers after, you know, trying to launch and get this thing running for about a month or so, that customer success rep had nothing to do. I think, basically, pre-launch or assuming that you're going to have some sort of traction with the products for your launch, you never know until you launch or put it out there.
That's what going back to my first point about just launching as early as possible. So you have at least some data. That's something when you're saying that early mistake that I hope everyone avoids. Definitely don't hire a customer success person or rep before you have customers.
John: Thanks, Zak. David, did something jump out at you?
David: Yeah. I'll talk to bringing on additional people to the team. Not necessarily employees, but more so co-founders or senior staff, who will have [00:14:00] a larger equity position than maybe others. My opinion on this comes from a few battle scars.
I'm a solo founder. I was a teenage solo founder. I've had other companies as well where I had co-founders. The truth is when you're looking for additional people to join your team, you're looking for people that can move the needle and complement your skill set. And I think, at least for me, earlier on, especially when you start digging into the VC statistics, and you're part of all these accelerators, and everyone else has a co-founder, it's very easy to start thinking about the fact that most startups that are getting funded have multiple founders and you have a whole team.
And there are a lot of positives to having a co-founder, but one of the mistakes that I lived through was trying to constantly bring on additional people to help me. And I still do this to this day, obviously, and we have a team in place, but I was very desperate early on to [00:15:00] find team members that had as much passion as I did, were willing to put in the amount of work and time and effort that I was.
And that's just not really realistic.
In the beginning. It's very easy to just throw away equity. It's very easy to just say, okay, I'm not taking the salary. I've got a hundred percent of this company, or I have a co-founder, I want to give them 30 something percent of the company or 25 percent or 50 percent. And that really comes back to bite you. Now, I never added a co-founder, but there were multiple instances where I was about to add a co-founder or about to add an advisor or a C-suite and gave them some sort of equity or was about to give them equity. And there are a number of ways you can curb your risk, but the thing that I found out that was probably one of the biggest things that I was, for lack of better terms, insecure about was the fact that I was a solo founder. And I knew as a teenage founder to this day, right, I don't believe I'm [00:16:00] the smartest person in the room. In fact, I don't want to be the smartest person in the room. And so in that constant seek for someone who could help me run the business, who had the gray hairs, who had the experience, I was constantly eager to bring people on.
There are a number of things that you can mention about what not to do and what to look for in those types of people that you're bringing on. But before you even get there, my biggest advice when it comes to this is don't rush to try to add on team members. It's okay to be a one-man show or maybe a two-person team or a three-person team. And it's okay to have interns or associates or junior people that can help lift some of the weight off of your back.
In no way, shape or form, you should be finding a co-founder or looking for a co-founder just for the sake of having a co-founder.
Seed to Series A
John: Awesome. Yeah. Thank you, David. So we're gonna jump on to the next phase of business [00:17:00] growth.
As a quick summary, stay close to the customer, get your story down, be really mindful about hiring or bringing on partners that could actually set you back, not push you forward.
What happens between Seed and Series A?
In this period, to eventually reach your series A, you need to deliver on some of the promises from the earlier phase. This means achieving product market fit and showing a clear shift in your growth curve.
So what's product market fit? One cheeky answer would be, if you're asking, you don't have it. When I've seen it happen, I've observed that growth is driven by one or two sales marketing motions, one or two primary motions. And, it's systematic. It's becoming systematic and repeatable. Growth is becoming more systematic and repeatable. It's almost mathematical. If you do X, Y, and [00:18:00] Z, then you reliably get output: more sales output.
The iterative learning continues in this phase, but I'd say the stakes are even higher. You need to figure out how to sell and market your product at scale while refining it.
A powerful technique for smart testing, this is getting a little tactical, is explicitly writing down the assumptions you're making. For example, one company I work with is testing outbound messaging right now, and they're assuming their customers are prioritizing coding speed. Getting through their coding faster. If correct, the response rates to the outbound messaging will beat a previous campaign that focused on their product quality over speed. So what I'm suggesting with this quick tactic is literally like going to the trouble of writing down your assumptions and then revisiting them when you're looking at your results.
At [00:19:00] this stage, you must confirm with sales evidence that you've found a large number of prospective customers struggling to make progress in a situation, in a specific situation, and that your product is the solution.
Unless you just luck out, this is going to take quantitative and qualitative customer data, things like interviews. The customer focus from the prior phase absolutely continues in this one.
And if I had to boil down business success to one thing, it might be understanding your customer's lives. That's true of every phase.
When you're increasingly successful with your sales and marketing and product experiments, don't lift your head up to see that every other part of your world is falling apart.
I take to heart David's comment that you don't want to be bringing on people too early but don't bring them on too late, either. Try to find the sweet spot. [00:20:00] You may need to grow your team at some point. And hiring the wrong person in this phase also, either the wrong person because of role, which Zak spoke to not needing someone in a certain role at all, or cultural fit or fit with you can really set you back many months.
Be intentional about what you stand for and what qualities matter in hires. And remember, not everyone needs to be full-time. There are a lot of flexible models for bringing on support these days. So this caution about raising your head to find things have gone awry applies to things like HR, legal, financial management, other ops, a complete lack of attention to these areas can cost you more time and money than doing the basics right to start.
And I'm not talking about perfection.
I'm just talking about good enough. Just make sure you're paying some attention to these [00:21:00] operational matters. Things like payroll-related snafus or neglecting confidentiality agreements and IP assignments: these can be huge nuisances, later when your business is growing.
By the end of this phase, there's still room for business model tweaks. However, it should be clear what problem you solve, what resources you need to deliver your solution and whether that's financially viable at the scale you're looking for. Showing hockey stick revenue isn't going to be enough if you're lucky enough to have gotten that far. Investors want proof that you can scale profitably with reliable customer acquisition and sustainable economics, even if you're still burning cash at the present moment.
So to raise your series A in the next phase, you're going to need to demonstrate you've figured all this out and that, and on top of that, that you can systematically grow the business up to a hundred times from where you are at the [00:22:00] end of this phase of your business growth.
With that, as we did for the last phase, Zak, why don't we start with you? Could you share some of your personal personal experiences or insights? Applicable to the Seed to Series A stage.
Founder Experiences: Tracking and Testing Your Assumptions
Zak: Yeah, for sure. I think there are a couple of different points I want to hit on. John, you were mentioning a bit about starting to capture data and write down assumptions and learn from different tests. I think. At this stage, it's crucial now that data is starting to pull in about usage, customers, things like that, that a constant testing and data-driven culture is built up within the organization, whether it's right, running A/B tests on a particular landing page as part of a sales motion, or running different tweaks or tests within the product itself to make tweaks there.
And you're going to start off with small numbers. You're not going to have statistical significance on these tests at [00:23:00] first, but you're basically building that muscle and then keeping track. And going back to the writing things down, so you never forget them, write down what tests you're running, what assumptions you have prior to the test and the results of that test.
You're basically building up this directory of all the past tests that have been run. You'd be surprised, if you keep that record over the course of three years, how many times a previous idea that you tested will come up as a new idea in some meeting.
You go back to it, you might have different numbers of users that you have 10 times the amount of users. So maybe you'll try it again, but at least that'll be the new assumption for that next test.
Transitioning this into the types of people you want to bring into the company, you want that hungry kind of culture fit type people that are data-driven. When it's chalked up between a kind of hungry person versus a so-called industry expert at this stage, you might be drawn towards the industry expert. But you're trying to disrupt the industry that [00:24:00] expert is an expert in. You might want to bring them on as an advisor and take a little bit of their expertise, but you don't want to rely and go with, "Oh, this is the way it's always been done. So let's just do it this way." I think if you're trying to disrupt an industry, you want to take the best parts of advice from those experts, but don't look at them as the source of truth as to how things should be done.
One kind of anecdote on this slight pivot and testing data-driven culture: our first kind of customer that we were marketing to was homeowners for home improvement loans. We basically were trying to match up homeowners with different home improvement loans and projects and things like that. We made one slight tweak, not to the product, but to the actual end customer that we were doing the initial marketing to. We ended up switching gears towards and trying out this as a test: "Hey, why don't we market this product to home improvement contractors because when they're in the house of a homeowner giving a bid that homeowner is a very high [00:25:00] intent to potentially take out a loan for a home improvement project."
That's just a slight tweak. We didn't change the product. We just pivoted slightly who the end customer is That allowed us to get more of a pull for our product market fit as opposed to a push in terms of all the campaigns that we were running. You still want that testing culture. When you start to feel like a pull from your customers, that's, for me, my sign of product-market fit that's starting to appear there.
John: David, did you wanna jump in?
David: The only thing I would add, because Zak once again gave a pretty comprehensive overview, the only thing I would add in or double down on is simply the fact that at any stage, really, and in my opinion, at least as a Series B company and prior, your main goal is to hire A-plus players.
We still do this today.
I was talking about it this morning. We'll, for the foreseeable future, continue to hire this way. There's something to be said about hiring people who [00:26:00] have industry weight, but the truth is, you want to hire for attitude, not aptitude because you can teach the aptitude portion of it, fairly straightforward.
And the attitude is something that you can't teach. So if you have the choice between someone who has little to no experience in the industry versus someone who has a ton of experience in the industry, but the difference is the person who has a ton of experience is a C-suite, or wants to be like a C-suite, and does not want to really do work and wants to build a team and have his team do the work and he just plays chess master. In a small startup and even in a midsize startup, it's very unlikely that is going to be beneficial to your company because, as you're trying to build, your main priority should be to execute and make mistakes as quickly as possible and then reiterate and make those same actions again.
And hopefully, this time, the second time around, you're not making mistakes.
So in order to do that, you need less time thinking, strategizing and sitting there and pondering about what [00:27:00] you could or should do, but rather, you should take the person who's just willing to put the pedal to the metal. And, honestly, just try to get as many, wins as possible. Whether or not they're 100 percent accurate and doing the right thing, I think, is secondary.
Let your team make mistakes, let them go ahead and learn on their own. My opinion is that is a much better approach. Someone who's obsessed with what they're doing and not necessarily knowledgeable about it is far more dangerous than someone who is incredibly knowledgeable but does not want to actually put in the effort to make the needle move.
And that, believe it or not, is a much more common occurrence than you would think.
John: I know one of the things we talked about back in the day a little bit, David, was just like, yeah, hiring a salesperson. This wouldn't be true in every case, but there could be a case where that industry expert in the incumbent culture and the incumbent model is actually really a bad fit, for someone who's trying to change everything.
David: [00:28:00] Yeah, Zak said it, right? You're trying to disrupt the industry. So why would you hire a person from the industry? There are benefits to doing that, and in certain positions, it makes sense to do that, but in the grand scheme of things, you will oftentimes, more often than not, find that the person who's in the industry, who's been there for 10, 20, 30, 40 years, is likely going to come in with the same ideas that have been done for the last 10, 20, 30, and 40 years. And that's not what you're doing. If you're trying to be different, And building a team that way and building a company that's revolutionary, you will need revolutionary approaches.
Q&A: Making Critical Hires
Jimmy: Awesome. One question that we received from our attendees was what are the most critical roles to hire and when during this phase, and is a technical founder critical, or can you rely on an outside dev?
Zak: I think it really depends on the type of company you're building. I guess the answer is a bit nuanced in that sense. Maybe one distinction that could be helpful is there are, [00:29:00] within kind of the tech or kind of software ecosystem, there are tech companies, and then there are tech-enabled companies. And so if you are a technical company you definitely need a technical co-founder.
But if it's a tech-enabled type services business that you're layering tech on top of or something of that nature, then you don't maybe fully need that technical co-founder. It really depends on the business.
But I guess my more general advice is to try within your best ability to do any and all roles and wear as many hats as possible. And you should be at least getting a first stab at the role that you're trying to hire for yourself. So you should be trying your best. Obviously, it's a little bit harder if you don't know how to code, but definitely, at least for other types of roles, marketing and sales, you got to wear those hats and try it out yourself. Then only when you're completely booked time capacity-wise do you then outsource to a [00:30:00] person?
Jimmy: David, any additional thoughts on that question from you?
David: No, I think you have to have some knowledge about almost every function as a founding team. And the truth is under 10 people, even under 15, every person in the company is going to have to wear multiple hats.
As a founder, especially if you're earlier stage, your goal should be to be dangerous enough to understand what anyone else tells you. You don't have to be an expert. For example, you don't have to be an expert software developer. I have a physical goods, industrial enterprise company in the advanced material space.
So it has nothing to do with coding. But because in the early stages, we were going through so many iterations of websites, and we want it to be that new age startupy company, and we want to have a better than usual website, I learned how to code just enough so that I could make modifications, basic things, on my WordPress site.
That isn't always necessary, [00:31:00] but I think, the more that you can do that, it does two things. One, it makes it a lot more scrappy and resourceful as a company for you as a founder and for all your team. Two, it also makes sure and gives you some schmuck insurance to make sure that you're not being told one thing that isn't, and you can really validate.
David: It's like for anyone who's worked on their home before and made home improvements. If you've done a replacement of the floor, and you know what effort goes into, let's say, resanding hardwood floor and an expert comes in, a flooring expert comes in and tells you that it's going to cost 25,000 to redo your floors, you can weigh the options and understand, okay, is that really worth it?
Because I, if I do this myself, I have to do X, Y, and Z and sure I might save 25,000, but is it really worth it?
It's the same concept. If you know what it takes to do sales. As hard as that is, especially if you're not an extroverted person who enjoys doing cold calls or meeting people or whatever the case may be for your [00:32:00] specific sales process. If you don't enjoy that particularly, you'll value it more when you find the right salesperson.
It also will mean that when you find someone else who doesn't really scream that perfect fit, who's a great salesperson, that you're not going to rush to hire them as one of your first few hires, just because it was one of the first few people that you interviewed and you could find, right?
It gives you that callousness that allows you to then say, "Okay, I know what it takes. I know what kind of personality you need, I know what type of metrics I need to hit, is this person the right fit, and is what they're telling me actually going to work."
Series A and Beyond
Jimmy: I get you that makes perfect sense. We'll continue to move, and then we'll leave a few minutes more for any additional questions that anyone has. I'll just give an overview here, and then we'll again hear from Zak and David on more specific examples.
By the time you reach a Series A, things start to look different. You've proven that your customers want what you're building. [00:33:00] You've secured funding, you built a team that believes in the mission. Perhaps things start to shift here in terms of scaling, right? And so scaling isn't just doing more, it's doing it better, faster and at scale.
So the scrappy founder-led execution that got you here won't get you there.
At this point, you're no longer building a product. You're really building a company. And the focus is now more on repeatable growth. So instead of testing the waters, you're now turning early traction into a scalable operational engine.
Three shifts here that I'll outline. So going from a founder-led hustle to scalable execution, right? You need systems processes and a leadership team that can operate without you having to make every call.
And then earlier going from early product market fit, now, you're going to more sustainable growth, finding repeatable go-to-market strategies, refining your sales process, [00:34:00] ensuring customers don't just convert, but they stay.
Also, going from a small, nimble team to a structured organization. So teams expand, roles specialize, and cross-functional collaboration becomes a necessity.
Some of the challenges right here are more about operational growing pains, so more teams, more customers, more evolving parts. Suddenly something that was messy has gotten just messier and misaligned. The founder role evolves, and so up to now you may have been involved in everything in the weeds, leading sales, making product calls. Now you're letting go of some of that and starting to build a leadership team that can execute without you being involved in everything.
And then expanding without losing focus. Do you go deeper into your existing markets? Or do you expand into new verticals? That's a question that startups really start to think about at this phase. So growing too fast can kill your momentum. Moving too slow can [00:35:00] stall you, and competitors can sweep in and get that other part of the market.
Here, the bridge really is about building those strong cross-functional teams. Sales and marketing and product have to be aligned, they have to be on the same page. Sales can't be telling customers one thing. Product is off, building, building something completely different.
Those silos really start to stunt your growth as an organization. You have to operationalize your culture. That really means that the values and the mission that you had your early employees and customers behind, now, you have to do that at scale.
So, really codifying your culture into your hiring, into your onboarding and leadership training, so then the culture doesn't just become a billboard.
And then prioritizing the product roadmap, right? What got you early traction may not be what carries you forward. So your product strategy has to evolve with the company.
Let's again open it up to David and Zak. [00:36:00] And maybe, David, I know you had chuckled. We can start with you and get your thoughts on, this phase.
Founder Experiences: Don’t Ignore Culture
David: Yeah, I think the first thing, based on my experience, is everything that you think you're going to do, everything that you put in your business plan or your conceptual ideation phases in the very beginning, is all wrong.
That's the only thing that you can be 100 percent sure of is that you're going to be wrong. That's okay. In fact, that's a good thing. Your company needs to evolve, and your culture will evolve over time.
I think it's super important that when you're hiring, culture has to be super aligned. That's not that simple to do. I think when you get bigger, when your company starts to grow, when you start bringing on people, you'll start to realize that culture is a lot more complicated than [00:37:00] here are my mission, vision and core value statements, and everyone should adhere to these.
It's far more complex than that, and it's also far more important than just that because when things get really tough, that's when culture really matters. That's not something that most people talk about. The culture isn't important because it's all kumbayas sit in a circle. We're all going to have fun and build this great thing. That's not why it matters.
It matters when you've got a customer who's calling you at three in the morning because you have a major blow-up in their system, whether that's software or physical goods. Especially if you're in enterprise sales, you're talking seven, eight-figure deals at a time that take years to build and just one screw-up to lose forever.
Even for small businesses, it's the same. It's the truth. Like we're going through a CRM shift right now, and it's all because one mistake that our CRM made. It's the case across the board when anyone is dissatisfied. They're far quicker making decisions to eliminate that solution that they're currently [00:38:00] using for something else.
That's when culture matters the most. When these times that are incredibly difficult, and they will happen, no matter what company you are running, there will be certain disagreements. There will be issues that come up, and culture matters then the most because that's when people will step up, provide solutions, and really act like they're owners of the company and care for the company like it's their own. That's the biggest thing that you want out of a good culture.
It's not the fact that you want to enjoy coming to work every day. That's important too. Don't get me wrong. But the truth is, when everything's gloomy and not fantastic, that's when times get really difficult as a founder, especially if you're a solo founder because you've got no one else to go to. That's when you need people to step up and bring a whole new approach.
But if they're not interested, if they're just in this for a paycheck, and they're used to the status quo, and it's just a company that they're at. And sure, they [00:39:00] align with your mission and vision, and they think it's cool, but it's not the forefront of their mind. They're going to waiver. And you're not going to get the level of output and dedication that you might be looking for out of an employee.
Zak: Just to double down on how important culture is.
I think the big competitive advantage that you'll have at this stage is that you're still lean, you're still coming after the A and the Seed, facing incumbents in the industry that are bogged down with processes. They're bogged down with meetings. And so trying to keep that lean mentality for as long as you can is super important here.
I liken culture to this concept where a good culture replaces like a few different processes here and there. For example, if you just have a strict 9 to 5 policy, and that's in someone's mind when they receive a phone call at 6 p.m., there's an "if statement" in their head, computer science person nerds thinking, "If statements" here. But if there's a [00:40:00] process that says employees only work from 9 to 5, then that person's not going to pick up the phone. Whereas if the culture is if customers are important, you pick up that call, you don't need a process or a rule there that it's nine to five. You just trust that people are going to do the best thing for the company.
One great book on this front is the Netflix one, No Rules Rules, where it's takes it to the extreme, where if you're just so bought in on this culture, you actually don't need to approve spends for employees who are going to travel. They know they're not going to take first-class tickets because that's going to negatively affect the company.
I think the more you emphasize culture here you can prolong the time at which you need to grow up as a company. You maintain that startup culture and really are able to continue to have that trust in your other teammates.
One other kind of quick anecdote here that I emphasized as our team grew is make sure every single employee, as you start to create different layers and the org structure starts to [00:41:00] grow, make sure for every task, every single person knows the why behind why they're doing that task. They're not just a robot picking up this task because it's in Asana or Jira or whatnot. They need to answer, Why are you working on this? Why is this important to the company? That just reinforces that culture that they're all moving towards the same collective vision there. Yeah, just another double-down on how important culture is at this stage.
Q&A: Is any Investor a Good Investor?
John: So one of the questions was, What should you work hard to protect that may get lost in transition from Seed to later stages, and I think part of the answer is culture. If you get it wrong earlier, it's going to come back to bite you now, and you probably need to work hard, I'm inferring from what you both shared, you need to work hard to keep it so it doesn't get lost as you grow.
Another question is, and this may be applicable to any stage, the final question [00:42:00] from the chat and the pre-questions, is is any investor a good investor or do the investors matter?
Zak: Anyone want to take it?
David: Yeah, of course, investors matter.
That's a tough question for any founder to answer because, on one hand, in most cases, you want, in an ideal world, you don't have investors, and you bootstrap it. You build a nice medium sized business, you exit or hire. That's not super realistic for most companies. That's okay.
As a result, investors matter in any event, because even towards the end of let's say a middle-sized business, most of the companies that you're going to be working with in an M&A transaction, whether those are M&A brokers, whether those are private equity groups, whatever the case may be, all of them will speak the same language as the investors do.
So, [00:43:00] even if you don't plan on raising venture capital or angel money, what's important about investors is how they think. Because most of them are just the same Patagonia vest-wearing bros from college that have a lot of merit and a lot of financial backing.
But the best part about it all is that it's copy and paste with most of them. You can pretty much, 50 percent hit or miss, take one group of investors and apply that same level of logic to the other group. Or if they're polar opposite, then they're going to find their own groups. They all flock together. Like it's the biggest conundrum in investing in the startup world, where FOMO is the biggest thing that you can create as a startup when you're raising capital.
The main reason is just simply because they all act and think the same. Or if there are some that are leading the charge and are opposingly different, that's great. They have their own clique as well that's just like them too. So the reason why all that matters is simply that they're a great resource, and [00:44:00] they're phenomenal, even if you don't want the capital from them, in helping you navigate what a transaction might look like if you're looking for acquisition. Now, if you're not looking for an acquisition, if this is like a mom-and-pop business that you want to run, a family business, that you pass, that you plan on passing down, then yeah, of course, then do whatever you think your small business needs. That's the way to do it.
But if you're in any other case where you are raising capital, or you're even considering potentially bootstrapping, the investors are important, and they're not important because they're just writing the check for you. They're important because they'll have governance and control. And you don't want to, you want to play a fine line, right? You want to make sure that your investors are on your team, but you still have the autonomy to run the business how you want to run it. Just be aware that if you make enough mistakes, you're replaceable.
That's all.
Zak: One thing, one thing I'll add to that is Investors also come with their own Rolodexes. And so [00:45:00] that's one thing to optimize for as well. So for instance, if you're starting a company in a niche space where there's only kind of four major VCs that operate in that space, well, talk to them because not only could they give you funding, but they could also introduce you to their portfolio companies that end up being your first 10 customers.
That's just something to keep in mind as well. You might have two offers from two different VCs, but there's a lot more that's behind that money that could be of an advantage to you. So one, one quick note to add there.
Conclusion
John: Yeah. Hey, Jimmy, do you have anything to add? And then we can, we do have a takeaway and a few things to share before the end of the call here.
Jimmy: Yeah, just want to say that thanks to everyone who was able to make it, and we'll definitely send out the summary of this chat to everyone who registered. So, if you join late, you'll be able to get some of the earlier key points.
John: Zak, you came off mute there.
Zak: Yeah, I came off mute. [00:46:00] One final thought is people are a lot more willing to help, so long as you ask. If you need advice on something or whatnot, you gotta ask first, but you'd be surprised how much people are willing to help, even if it's just their own two cents on something.
It's better than nothing.
David: That was my exact, that's exactly why I came off mute as well.
John: Awesome. David, Zak, thank you so much. We really appreciate you sharing.
And Jimmy, it's been a pleasure. I think we're good. Thanks.
Jimmy: Thanks. We'll send out a note on part two of this series in a couple of weeks.
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