Lean, efficient teams: some learnings from bootstrapping
It's tough times! Allocate your capital well, prioritize, communicate clearly, hire for those priorities and leverage your existing talent
Extending runway is top of mind for every founder in our current environment. Most teams are undergoing layoffs, cutting expenses and slowing hiring. I bootstrapped my previous startup, Emptor, and had to learn to deploy and allocate capital efficiently to survive and grow.
As a CEO, you’re wearing many hats but one of the most important ones is making sure your company can continue to operate, basically, having enough money in the bank to keep the lights on. Often this is thought of as the ability to raise capital, not so much how to allocate capital, the latter is becoming more important as VCs are issuing guidelines to extend runway, in some cases, up to 24 months. The Outsiders by William Thorndike offers insight into exceptional CEOs, not the more colorful, textbook leaders, like Jack Welch, but instead those who outperformed based on stock price, i.e. returning value to shareholders. It shares stories of exceptional CEOs as being great capital allocators, effectively using resources as fuel to invest in, acquire or expand high value parts of the businesses they run, creating outsized returns to shareholders.
How do you use the capital you have to create a ton of durable value?
I’m going to share some insights and frameworks we used while bootstrapping, where runway is subject to the revenue you generate, and every dollar you invest is a bet on producing more value to scale your company.
Org design and hiring the right functions
Why hire? Some teams end up ‘throwing bodies’ at a problem: need more revenue? Hire sales reps, not growing fast enough? Hire a growth hacker, no PMF? More engineers. No progress? Fire them all, start again. Iterating is important, but poor hiring is expensive, time consuming and bad for morale. Most of leadership should be heavily involved in hiring early on, this means that in human capital dollars it’s one of the most expensive things you can do.
Begin by org design, map out the goals you have and the functions you need to accomplish those goals. Does your existing org match? find gaps and excess. It’s worth noting that this isn’t about titles, it’s about functions, early on you’ll likely have the same person in several functions.
This exercise is a great sanity check for identifying skill gaps, team members with too many hats and duplicated efforts in the organization.
Leveraging your existing talent
As your company evolves, so does your talent, particularly fast-learning early hires that join startups to supercharge their careers. Jumping to an external hire may overlook a talented insider who is ready for upward or even horizontal mobility, they could be higher impact and better prepared to operate than a new face. Considering internal talent that you’ve grown is great for morale, retention and an efficient use of the bright, energetic human capital you’ve already invested in!
A byproduct of hiring from within is that you can open a more junior role that can be onboarded by your inside person, further motivating your bright team member and making the hiring process leaner from a human capital and management energy perspective.
This was a pretty common phenomenon at Emptor, over the years we saw examples such as Operations team members going into Product, Sales and Talent, a PMO team member covered Product Marketing and a business development hire became head of legal.
Communicate better, manage less
As you start scaling a team, communication, sharing goals and getting the whole team on the same page is harder. A place that does this really well, and at scale, is Meta. Meta employees aren’t told what to do by managers, they are told to find work that generates impact. What is impact? Well, in the case of Meta it's actually quite clear, what drives growth at the company is user engagement: monthly active users (MAU). Mo’ eyeballs, mo’ money. That’s their North Star Metric. Spotify’s is Time Spent Listening. It seems simple, but coming up with the single metric you’re optimizing for takes some deep thinking about your company. Teams that have dozens of top level OKRs, say, optimizing for users, AOV, clicks, clients, etc without a clear understanding of what will grow their business will struggle to identify which efforts are being successful and which aren’t.
We ran a North Star Metric workshop internally, it opened up in-depth discussion on what our priorities were, which features to support, what we considered was adding value and why. It sharpened our ability to verbalize what the most important work was to the rest of the team.
Some tools, frameworks and resources
Emptor was born as a fully-remote, international company in 2016. It’s funny to look back now in a post-pandemic world, back then, we were told by VCs that there was no way we could create culture, we couldn’t trust that our people were being productive and that overall it was a terrible way to run a company. The last time we heard this type of advice was August 2019 ... We inherited some remote work practices that my co-founder and early hires brought from Zyte (fka Scrapinghub), but had to build a lot of our own methods and frameworks along the way. Here are some of our favorite books, frameworks and tools we built, found or adopted. A lot of them thanks to our very talented leadership member, Valeria Reyes, who is now Director of Human Resources at LALA.
Org Design – Draw out the functions in an org chart, agnostic to who actually performs in them. Are your teams service teams, cross-functional, centralized or deployed? Consider the skills you need for the North Star Metric you’re optimizing.
30, 60, 90 – A living document that we created before we post a role, expectations for the first 90 days. Does the role we’re hiring make sense for the tasks, responsibilities and seniority required? Sometimes by the end of the 90 days the role was completely different to what we had hired for, that was ok, it made it easy to adjust title, comp and responsibilities to what the team member was actually doing and the company needed.
North Star Metric – Amplitude has a whole ebook on this, along with video tutorials, graphics and step by step process to find your North Star metric. It’s a dense exercise, have a non-leadership team member run it so you’re all free for a rich discussion.
The Culture Map – International, Cross-Cultural communication, even if your whole team comes from the same culture, your clients, investors, partners may not. It’s also a really fun read.
The Culture Code – admittedly, I read this by mistake seeking the book above, it shares great stories on how highly effective teams work and communicate from Navy Seals to Kindergarteners doing better on a group exercise than MBAs.
For more on how I partnered effectively with Valeria to help run a lean efficient team at Emptor, subscribe to The Pendulum. We’ll be sharing more on her career, lessons in Talent leadership, hiring, remote work and the future of work.
Oriana I. Fuentes is a serial founder, a former JPMorgan Investment Banker and Trader, and has a Masters in Machine Learning from Columbia University in New York.