Nationwide Expansion… Fuck me. Chapter 2:
“Getting Our Act Together”
Hey again. Glad we’re both still here.
So… Startup expansion can be divided into 4 categories.
1. Money
You’ll need funds to expand. I’ve raised $1.4M for Roost so far. One takeaway: your burn rate will skyrocket the moment the check hits the bank. Raises to early employees. Health insurance. Deferred legal fees (you can’t sneak a fundraise passed your lawyer), the list goes on. Don’t kid yourself. Calculate runway based off worst-case and ever-increasing spending scenarios.
From the math I’ve done, the first couple months of expanding to a new city will increase your burn rate AT LEAST $15k/month per city. Double that for big cities like NYC.
A new city launch means starting from square one. But, since this isn’t your first rodeo, the process should be smoother.
Think back to when you first launched and what it took to gain traction. Copy and paste that into city #2 but add for speed and reach and subtract the beginner mistakes.
2. People
Some new additions to our staff: two developers, a community manager, a customer success manager, and a couple grassroots marketing interns. We are now 10 Roosters strong. We’re also in the search for a NYC General Manager.
I made a super cool way to vet candidates. It starts with this AngelList job posting. (If you’re not hiring on AngelList, then you’re missing out. It’s free, there’s a Tinder-style matching mechanism, and the candidates are top-notch.) Once I had a good list of interested, qualified candidates, I called them between 10 and 11 PM (their time.) No email introduction or call scheduling. Just an out-of-the-blue, super-late call from ‘this guy’.
Here’s what I said:
“Hey so-and-so, this is Jon, the CEO of Roost. Sorry for the late call, but not really since I meant to call you this late. After checking you out, I think you may have what it takes for our NYC GM role. I’d like to start vetting you now. Are you game? Yes? Great. The first step is for you to create a video, no more than 5 minutes, of you convincing me to hire you. I want it in my inbox by the time I wake up tomorrow on the west coast. No script, no fancy editing. I want you to turn on a video camera and just wing it. Why? Because a great GM needs to be an entrepreneur. That means being comfortable in a high pressure, quick-turnaround situation. No direction or preparation necessary. Just wing it, and come out looking confident with a high quality product. Sound good? Great. Sleep well!”
All in, the call took less than 2 minutes. I quickly explained that I would be in NYC the next week to meet with select candidates and have real conversations. The candidates were all jazzed up by the ridiculousness of the challenge. Some candidates were out drinking with their friends, others were asleep. A couple candidates said no… Too bad. If they don’t want me I don’t want them. Some of the videos were amazing. Others so terrible it hurt. I’m pretty sure I can’t post the terrible videos here, but here is a good example.
3. Technology
Your tech will need to scale. We’re doing something unique with ours. Feel free to use this plan (if it works out, of course). I’ve been calling it our Kickstarter Expansion Plan. Until yesterday, you could only create storage listings in San Francisco.
Big news:
YOU CAN NOW CREATE LISTINGS ANYWHERE IN THE USA!!!
BUT… they won’t be rentable until we hit a certain number of listings in that city.
Once we reach our magic (read: made up) threshold, we’ll go live in your city. Want us there quicker? Whelp, you gotta share us with your friends! The best part? The waiting gives us time to quality control. If we need more time, we increase the threshold. We can now meet hosts, take photos, onboard, etc. without our hosts getting disappointing by lack of demand.
We’re letting each new market make itself. And when it does, our hosts will be ready and awesome.
4. Execution
I’m talking about the playbook. The expansion playbook.
Wait… What the heck is an expansion playbook?!?
I’ve read a lot and talked to a lot of entrepreneurs about this. My original conception of an expansion playbook intimidated the crap out of me. I likened it to the Bible. Long, difficult to read, easy to misinterpret. I pictured a chorus of angels (the investor type) singing in falsetto harmony each time it opened.
In actually talking to people, I found my previous ideas to be bullshit.
An expansion playbook is more like the Ten Commandments.
It is a glorified series of checklists; super specific, modular, easy to follow, easy to edit. You should be able to hand it off to someone across the country and tell them, “go”.
We’re working on ours right now, and I’ll share as much as I can later in this series.
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Stay tuned for Chapter 3: “Haven’t Thought of the Title Yet”.
New stories will be released monthly. To follow along on this adventure, do ALL OF THESE THINGS:
- Set a calendar reminder to watch Syfy’s “Bazillion dollar Club” premiering September 22.
2. Follow me on twitter @gonjillon
3. Follow Roost on twitter @roost
4. Grab a tasty beverage and watch us bumble and stumble our way to the unicorn club.
