Navigating Growth in Volatile Times: Founders Fireside Chat
Moving from startup to high growth scaling is every early-stage founder’s goal. As if the transition wasn’t challenging enough, steering a business through macroeconomic uncertainty requires even sharper focus and bold decision making, testing founder agility in new ways.
In our latest session co-hosted with Google for Startups, Oz Alon, co-founder & CEO at HoneyBook, and Assaf Wand, co-founder & CEO at Hippo joined to discuss their views on how founders can best maintain momentum, the company culture while navigating market turbulence and the new work-from-home norm.
Check out the full recorded session here or you can read a full recap of the conversation below.
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What have you learned about co-founder relationships, selecting co-founders and how those relationships change over time?
Assaf: Finding the right co-founder is usually very opportunistic. People who click and compliment each other make the best co-founders. If you want someone who is really strong in a certain domain (i.e. technical vs business expertise), go talk to everyone you know in that domain and learn as much as you can. I went and interviewed every CTO I could to get their point of view on who they would hire. Who is the strongest VP of Marketing you know? People in the domain help you vet the options, since you don’t know anything. Go and talk to people.
Secondly, you want a co-founder who gets pumped up about the vision and is aligned with you from the beginning. Not someone who is going to get excited about features of the product for whom you don’t yet even have any customers. Get everything on the table from the beginning. Is your co-founder ok with you handling interviews or do they want to be included in all of those? What kind of culture do they expect to have within the company? It’s really important to fully trust the other person, but it doesn’t have to be your best friend. You need to have complete alignment in values from the beginning and erase any potential for politics and ego. You see a lot of companies breaking apart because the co-founders can’t get along.
Oz: For us it’s very different because my wife is my co-founder. But we founded the company with a third co-founder and we did get to know each other very closely before we started on the journey. We didn’t know what a good employee looks like, or what a good co-founder looks like. We started to build one product, and we ended up building something else entirely. So you learn a lot in the process of starting the company, so the founding team needs to be super tight and aligned. The first 10 employees are the ones that are going to define the culture and set the direction for the future of the company. Spend as much time as possible.
Assaf: In a growth phase, it’s all about people. The first 10 employees are the ones who are going to be the most loyal, but there are going to be tough decisions and conversations with those people as the company grows over time. Often you need to bring in a new VP of Product or Chief Product Officer to take over from one of your original hires, so how do you best manage those conversations?
Oz: For our first hire in the US, we thought we were bringing her in for marketing, but we called her a co-founder (even though she wanted to be a CMO). Years later, it seems like a really good decision that we did that. She was able to move across teams, start new teams, etc. because she was never tied to the CMO title. She was able to be a generalist that was very valuable to a young and evolving company. She even eventually ended up reporting to our COO.
Both of you are extremely thoughtful about how you think of co-founders and building a team, are you as thoughtful about how you find investors to bring in? What is your strategy for testing investors to see if they are the right fit for you?
Assaf: We actually have a very low bar for investors — most are just a source of capital, even if they think they help you and bring all this additional value. There’s a tendency to give people from the biggest, most well-known funds disproportionate weight in decision making at the Board table. VCs do not provide a lot of value,” you want those that are going do the least amount of damage and cause the least disruption. We chose investors that gave us distribution and access, rather than the brand name. We chose Comcast Ventures for example over other top VCs. The most important part is to get the best money and terms you can.
What we’ve done is prepare a huge amount of data, analysis, etc. and then pick a date. We contact every investor we can and say we are fundraising for the next three weeks, here is all the material, and if you’re in, great. If not, then you’re missing out. A lot of investing is all about FOMO for investors. You want to find the right partner within the fund, rather than meeting the fund itself.
Oz: At the end of the day, the people on the Board can’t really understand your business. I have to remind myself of this over and over. It seems like they might know all about your business, but you can never assume they remember anything from one Board meeting to the next. We need to have a thoughtful conversation about how you plan your Board. Not everyone who writes a check should get a seat. Does every single investor have the same domain expertise that you do? Probably not.
Assaf: The Board members that you like the most are the ones that should say “whatever you need, I’m game.” Board members are all about corporate governance. They should hire/fire the CEO, approve my budget, and that’s it. but their job is not to give strategy or any other input on actually running the company. I don’t enter a Board meeting where I don’t know the outcome of that meeting. I send every Board member the materials and have a conversation with them prior to the meeting to address any questions or particular issues they may have but I make it clear that stuff is not to come up during the actual meeting. A Board is supposed to be a force
