17 Lessons I've Learned Working at a Growing Startup
After going through some dark times two years ago, what follows is a long road of redemption as it will take me years to pay off the debt from my angel investors. It would have been much easier to just move on and give up my dream, but I was looking for opportunities that would help me grow and make my future startup successful.
Ultimately, I was lucky enough to join a growing startup giving me a chance to practice what I've learned from my previous failure. It has been a fruitful journey since I joined this team of seven. As far as numbers go, we've grown users to thousands of companies, team size close to 30 people and revenue more than 100%. Not bad for an early stage startup based in Hong Kong serving world-class companies like Airbnb, Shopify, and Intercom.
It's an intense learning experience to witness a startup making the transition from searching for a business model and product/market fit, to the next phase of building the infrastructure to support scale. Since everything happened very fast in the past two years, I think it's time to document some important lessons I've learned through screwups and triumphs.
Here's a few of them.
1. Reinforce core values every day
Just as important as establishing company's core values is reinforcing them. The values should seep into every aspect of the startup and should be reflected in everything from how the product is developed to who the company is going to hire. Why are values so important? Because they offered team members a guide for decision-making and a sense of what’s right. Most importantly, they shape the culture and define the character of the company so don't fuck it up.
Unfortunately, many startups still consider this to be a waste of time or are still stuck in the “we're too small to need that” mindset.
“Values are the house and culture is the furniture...People want to work in a place that feels right to them. They need to feel comfortable at work. In the way that a welcoming home with comfortable furniture is pleasant to be in, a company with good values and culture is pleasant to work in.”
- Fred Wilson, Union Square Ventures
The bottom line: “core values” are more than just words on posters. Bring them to life.
2. Understand opportunity and complexity costs
The ability to understand the difference between “costs” and “opportunity costs” is definitely one of the attributes that separate good from great startups. That's why successful startups say “no” all the time.
For example, when one of your customers made a feature request, often times it's easier to say “yes” because you don't want to disappoint the customer, especially if your startup is still in early stage. However, you also need to consider other opportunity costs. Will this distract you from doing things that have greater impacts? Will fixing the leaking activation funnel save your more prospects every day? Will the added product complexity hurt future customers? Will this create complexity cost in your engineering team?
“The work of implementing a feature initially is often a tiny fraction of the work to support that feature over the lifetime of a product, and yes, we can "just" code any logic someone dreams up. What might take two weeks right now adds a marginal cost to every engineering project we'll take on in this product in the future.” - Kris Gale, VP Engineering, Yammer
Saying “no” to the slippery slope of temporary patches may feel painful in the short term, but it forces you to focus your engineering time on a better, scalable and sustainable solution.
Don't just measure costs in dollars and hours. Try to measure them in team morale and lost opportunities as well.
3. Leverage decision-making frameworks
In my previous startup, I often relied on gut feeling to do things on an ad hoc basis. Without guidelines for core operational processes and workflows, I ended up losing focus on execution and let the team run sideways. Now I've learned to use different decision-making frameworks to act as checklists to ensure the company not leaving out important details when making big decisions.
Best of all, well-structured frameworks help your entire team get on the same page about how you operate things, and how you function as a team. Even so, don't follow any framework blindly, but don't go in blind either.
4. Develop speed as a habit
Many people believe that speed is the ultimate weapon for startups to compete with incumbents. Nevertheless, how can you make speed as a serious competitive advantage in every aspect of your company?
According to Dave Girouard, former President of Google Enterprise Apps, your startup's success depends on your ability to develop speed in two simple things: making decisions and executing on decisions. When making a decision, focus on “when” rather than “what”. If a decision is reversible and non-fatal, it should be made as quickly as possible. So you can speed up the execution next. It's true that some complicated and critical decisions do require a longer time to decide, but most of the day to day issues shouldn't be in that category.
When you feel things start to slow down, simply ask: “Can you help me understand why something would take so long? Is there any way we can help or make it go faster?”
5. Create feedback loops
Feedback loops are essential components of every role within a startup. For product, there is customer feedback and engagement metrics. For engineering, there is technical performance measure. For sales, there are LTV and productivity per sales rep metrics. For customer success, there is churn rate. For marketing, there is viral coefficient, payback period, and others.
Examining feedback loops could be tedious sometimes. That's why many startups give it a very low priority. However, it takes a continuous effort to build a successful startup. So we need feedback loops to help us keep scores and identify areas for improvement.
According to Tomasz Tunguz from Redpoint, when evaluating loops, we need to consider three main characteristics: (i) the feedback latency or the time it takes to receive feedback (ii) the feedback potency or strength of the feedback loop and (iii) the feedback efficiency or amplification.
Your goal is to create and optimize sustainable positive loops to drive the growth of your business.
6. Product management is about winning not finishing
Product management is more than gathering requirements for engineers and designers. Besides the basic responsibilities (strategy, prioritization & execution), great product leaders reliably lead their teams to win games.
While projects are about output, products are all about outcomes. Never confuse product management with project management. If your product was released on time but didn't meet its objectives, what was the point of making it in the first place? Therefore, besides product specification, prioritization and execution planning, PMs need to clearly define the product/feature's success metrics so that everyone on the team would have a clear idea of what winning means.
Obviously, product management is a demanding but valuable work. If doing it properly, PMs can align cross-functional teams, boost morale, and ultimately create products that move the needle for the company.
7. Product-driven or sales-driven? Pick one
Are you a product-driven or sales-driven company? This is a question every startup needs to ask itself. While great products won't sell themselves, the strength of sales alone can't define a company's success either. So ideally, startups should determine which of the disciplines is their strength and focus on leveraging that advantage in the market.
Personally, I prefer products to drive sales rather than the other way around.
Why? It's because most sales-driven startups will turn into service organizations eventually. They are often focused on maximizing short-term revenue and this mindset could destroy the product. The natural consequence is that they will evolve into service companies as they are building every feature that customers are asking for instead of following a long-term product vision. If your team goes down the path of pure support ticket driven development, it is a strong signal that your product is headed for self-destruction.
As a result, if you want to build a top-notch product, the simple answer is you need both but the product has to be the foundation.
“Once you say yes to (special one time requests), even if you tell the customer it’s a one-time thing, it becomes harder to say no as there’s now a precedent. While you may think you’ve solved a customer’s problem and kept a customer, in reality you’ve set an expectation that sets the customer up for bigger disappointment later.” - Nate Munger, Customer Advocate, Intercom
8. Balance data-driven and gut-driven product decisions
It's common to think that intuition and data are at odds in product decisions. When startups optimizing everything for speed, data-driven decision making is often pushed aside in favor of gut instinct. Unfortunately, without any data, there is no way to find out whether your product is headed in the right direction. You’re going to spend a lot of time and money on detours and failed product features that will result in frustration for everyone.
“For the first two years of Twitter’s life, we were flying blind… we’re basing everything on intuition instead of having a good balance between intuition and data… so the first thing I wrote for Square is an admin dashboard. We have a very strong discipline to log everything and measure everything.”
- Jack Dorsey, CEO, Square
Having said that, it doesn’t mean that using data alone can guide you to the right decision because it's just one of the many perspectives that are useful for product decisions. Your customer feedback is another perspective. Your design instincts built on a foundation of experiences is another. To make a smart decision, you gather the perspectives that make sense to you, weight them according to your judgment and then make your own call.
To put it another way, data can show past performance but don’t necessarily indicate future direction. That's where the vision part comes in. Sometimes you need to be willing to say “We believe in this, Fuck what the data says”.
9. Understand the two inconvenient truths about product
According to SVPG, there are “two inconvenient truths about product”:
- The first truth is that at least half of your product ideas on your roadmap are not going to deliver what you hope.
- The second truth is that even with the product ideas that do prove to have potential, it typically takes several iterations to get to the point where it actually delivers the necessary business value.
While it is impossible to escape these truths, how your team dealing with them makes a real difference. Based on my findings, I found that the development process at HubSpot is one of the most optimal solutions on these issues, especially for startups which have found product-market fit.
HubSpot doesn't believe in roadmaps and specs because they don't allow teams to change direction based on the rapidly changing environment. Instead, HubSpot uses a “sailing approach” in product development. As long as their teams have a clear, shared definition of success, each team has the autonomy to figure out the best solution for reaching their goals. The focus is to put something in front of the customer as quickly as possible, get their feedback, learn and respond. Sometimes, that means they have to figure out a new route. Other times, they can stay on course.
“Looking back, I see some strong parallels between sailing and how we build products at HubSpot. The reality of sailing is that no matter how much you plan, measure, and study you can never truly know the conditions until you are actually on the water...Water, wind and people are extraordinarily dynamic. But despite all of this, a good sailor can always get from point A to point B by using their instincts and instruments to find the right path.” - Jeremy Crane, VP Product, HubSpot
The biggest flaw of the old Waterfall process has been putting all the risk at the end. In other words, customer validation happens way too late. If your startup is still focusing on implementing a prioritized list of features in your roadmap every day, think about whether you can reduce waste/risk early in the development cycle, and move much faster and more effectively than you are today.
10. Handle feature requests carefully
Before product-market fit, you typically get very excited about feature requests because it's a signal that you're making something people love. You want to implement each feature request to keep early customers satisfied. But when you are getting closer and closer to product-market fit, this approach might work in the short-term. Long term, it’ll lead to resentment from your product team and future customers.
In fact, it’s the nature of feature requests to contain the “what”, but not the “why”. Without understanding the why, you risk building an incoherent set of features that address very specific use cases or the needs of vocal customers, without solving the real problems that are common to the majority of your users. The belief that adding more new features will suddenly make more people want to use your product is untrue. There are many reasons why your product is not growing fast enough - maybe the onboarding funnel is leaking, or the positioning is confusing, or you have already created a feature creep monster, etc.
“Customer feedback is great for telling you what you did wrong. It's terrible at telling you what you should do next.”
- Phil Libin, CEO, Evernote
When you get suggestions from customers that don't fit your team's product vision, you have to be able to say “No”. This might mean you have to turn away potentially good customers in the short run, all for the purpose of attracting great customers in the future.
Remember that excessive people-pleasing after product-market fit can ruin an initially good product.
11. Always start with customer experience before technology
Although more startups appreciate the value of design now, many engineering-focus teams still treat designers as second class citizens within the company. They often put technology ahead of customer experience. They debate about tech stacks before first understanding whether people want such a product. When designers finally get involved, it’s way too late in the game to get the real value of design. The damage has already been done, and now designers are just trying to put a coat of paint on the mess. In this approach, they only focus on visual design but not product design, which is arguably the most important part of what a designer do.
“You’ve got to start with the customer experience and work back toward the technology - not the other way around.” - Steve Jobs
The path from idea to finished product can be long sometimes, but design provides us a shortcut, prototyping, to get feedback from potential users quickly. More importantly, it helps us validate our assumptions and answer important questions. After all, the biggest loss usually turns out to be the opportunity cost of what the startup should have been doing instead, so this early product validation is the easiest way to test whether you are wasting time and money.
Design can be overwhelming and confusing sometimes. But when using it properly, it can be one of your competitive advantages in a crowded market.
12. Stop look for "silver-bullet" solutions in growth
Media loves to glorify famous growth tactics. That's why so much emphasis these days is placed on “The One Hack That Grew My Startup 1,000%”. Those headlines encourage startups to pursue silver bullets. But growth is about the long run.
“The reality of growth is that there is never a silver bullet. This doesn’t mean you won’t have experiments that produce outlier results. You absolutely will. Most outliers result from combined learnings of a bunch of previous experiments. They come from knowing your channel, product, and customer better than anyone else on the market and taking informed risks based on those learnings.” - Brian Balfour, VP Growth, HubSpot
Ultimately, you need a process that is going to continually generate new growth ideas, test them efficiently, learn from them effectively and use those learnings to navigate towards unlocking continual growth. If you can do that, you will win in the long run.
13. Understand the expanding role of marketing
Marketing tends to be a dirty word among many technology startups. Working at such a role means that you’re not technical enough to be an engineer, designer, or product manager. Some people even think that anyone can work on marketing tasks. Yet, it may not be true now, or even in the past.
B2B marketing has become radically more complex in recent years. Marketers have to not only engender awareness and create interest, but also guide users much deeper into the funnel. For example, Zendesk's marketing team has integrated 32 different software/services together in their sophisticated marketing technology stack so they can make qualitative assessments and prioritize their efforts based on the impact of their campaigns and users' engagement in their funnel in real-time.
The purpose of this new approach is to help marketing teams explain why growth is happening, see the business impact, and accelerate growth based on the learnings. For example, to do distribution well in B2B, startups need to have experts in areas like demand generation, SEO, A/B testing, conversion rate optimization, paid channels, growth experiments, lead nurturing, leading scoring, just to name a few.
Nowadays, marketing can create unfair advantages for your company. Take it seriously or be left behind.
14. (Over)communication is very important
When you team didn't know the direction of the company or was confused about their everyday tasks, you knew you've fallen short on communication.
Sometimes, I realize when I didn't communicate the context or the expectation of a project clear enough, the project would take longer than originally expected. This is something I need to keep working on.
Startup members generally are hungry to know how they can contribute, find something to own, and make a significant impact. With clearer shared objectives, you can give your team greater autonomy, which allows for more innovation and quicker execution. That's why over communication is key to a well-run organization.
Never let your team in the dark.
15. Don't leave the pitcher in the game for too long
It's a metaphor by Jeff Weiner, CEO of LinkedIn, explaining that we shouldn't leave a team member in a key role when it's no longer the right fit.
Personally, sometimes I'm too optimistic that under-performers would grow over time and eventually be capable of doing the job or meeting our expectations. In retrospect, I need to learn how to create a timetable as soon as I've recognized an issue exists, e.g. how long will I give the situation until making the final determination that the team member can't perform in the role? Be transparent about timing, expectations, and what I will put into place to assist them, e.g. coaching, learning materials, etc.
“There is a simple rule of thumb here: If you have to ask yourself (or others) whether or not someone on your team is doing their job, you likely already know the answer. They're not.”
- Jeff Weiner, CEO, LinkedIn
If startups made this mistake repeatedly, they would accrue serious organizational debt, which could turn a growing company into a chaotic nightmare. You definitely want to avoid that.
16. Focus on coaching over problem-solving once in leadership
In a fast-paced environment, where the focus is on shipping a product or resolving customer issues, coaching is often viewed as necessary only when employee performance is poor or when employees are planning to leave. One should not neglect the benefits of coaching: if doing it properly, you can improve productivity, increase morale and bring out the best in your team.
Oftentimes, managers who were effective in problem-solving only have a fraction of the skills they need to be effective leaders. They have to re-learn important coaching skills on the job. For example, instead of directing people how to solve problems, successful leaders ask open end questions to encourage people to figure out the solution themselves. This is a skill developed only through practices.
Keep in mind, retaining top talent and boosting team morale are vital to your startup's success. So rather than waiting for things to go wrong, or accepting subpar performance, it's important that employees receive ongoing performance feedback or coaching, because if you want better employees, you just might have to make them.
“Only through successful coaching can a leader scale to lead a large organization.” - Jeff Weiner, CEO, LinkedIn
17. Be kind
Being kind isn’t the same as being nice and not speaking up about issues or problems. It just means you have to take responsibility for your impact on the people around you.
“Being an asshole was way easier than putting in the work and showing the compassion required to be a good leader.” - Jeff Weiner, CEO, LinkedIn
Being kind can not only create a happier and more positive work environment but also maximize your impact on the team. Why? If no one wants to work with you, how much can you expect to accomplish on your own? In order to communicate effectively, you need to aware that you are responsible for how you make others feel.
“This is one of the top mistakes I see in first-time CEOs. They care so much about the company, but they forget to care about the people, the team. They just assume everyone should be as committed as they are. But everyone else can’t be.”
- Jason Lemkin, SaaStr
Many people think that arrogant, ruthless, jerkish characteristics are necessary for a startup to succeed. I respectfully disagree. Try to care more about people. And show it.
Hope you can benefit from the lessons I've learned in this special journey.