Our panelists:
- Noelle Tassey - CEO of Alley
- Liat Karpel Gurwicz - Strategic Marketing for Wix.com
- David Ehrenberg - CEO & Founder of Early Growth
- Ferdinand Grapperhaus (jr.) - CEO and Co-founder of PHYSEE Technologies
Whether you’re a CEO, team leader, or someone just starting their career, this series will have key takeaways that will empower anyone to become a better leader.
This month, our conversation focused around how leaders can scale their startup proactively. In this recap learn about what rapid scaling feels like as an experience for both leaders & employees, the toughest phases of growth & how to survive them, and how to build your team & company for long-term success.
Mentioned Resources:
- Wix eCommerce Site & Blog
- Wix eCommerce School
- Wix eCommerce overview video
- Three steps to dealing with exponential growth.
Additional Q+As:
COVID has certainly created opportunities for healthcare - where do you see immersive experience evolving there? Thinking specifically of the very different lives those who are immune compromised must now lead--despite having some of the deepest needs for skilled care.
Uyoung: One opportunity for immersive in healthcare is improving patient education, both in and out-of-hospital, when we think about how the future of telemedicine and virtual visits could evolve with 3D/AR to accommodate much deeper service. Here is a summary article from Verizon specifically on how 5G can help transform healthcare, touching on some of these areas for evolution.
Computer Scientist Joy Buolamwini, founder of the Algorithmic Justice League has identified gender and racial bias in AI, how do we solve for that bias in creating more equitable immersive experiences on the platforms that are being coded and developed by majority white male coders? For instance I assume most headsets are being manufactured with average white male heads like NASA spacesuits in size and dimension
Uyoung: This is an insightful issue to raise awareness on and one that continues to underscore the importance of diversity and inclusion across industries. In addition to root problem-solvers like diverse hiring and equitable on-the-job representation, I think an area where immersive can play a role is more effective, empathetic training of employees around diversity & inclusion and incorporating diverse consumer feedback.
As a designer I was curious how you work with visual designers and artists to take advantage of these new technologies? Are there any projects or artists that you would recommend looking into?
Uyoung: My team works with both traditional ‘2D’ designers and 3D designers / CG artists, and if you have the eagerness to learn - there is so much out there to tap into. Our 2D designers, for example, are learning about everything from 3D scanning (which for beginners, you can easily find apps for on your phone) all the way to more complex workstreams around 3D artistry. There’s always great work and resources to check out on networks like Behance and CGSociety too.
How do you see companies and customers adopting this tech? Besides gaming and movies, what other industries may benefit from this tech?
Uyoung: I see immersive affecting just about every industry. Automotive is already affected (using immersive vehicle design and development) - and will be affected in the future from a product visualization and transaction POV. Retail in general through product visualization, virtual try-&-buys (everything from makeup, clothing to travel destinations). Tech when it comes to cross-device compatibility when immersive products can be used for increasingly more use cases that might then need to communicate with our other devices, gadgets, appliances.
Transcript:
Noelle Tassey 0:00
Hi, everybody, welcome. And thank you all so much for joining us this Thursday to talk about scaling your startup proactively. I'm gonna introduce you to our amazing panelists in just a second. In the meantime, for those of you who don't already know me, my name is Noelle Tassey, and I'm CEO of Alley. Alley is a community of entrepreneurs and corporations leveraging innovation to create positive change. We work between large corporations and startups to build accelerators, community programs, digital events series, and so much more. And I want to give a big thank you to our sponsors of this particular series and our partners at 5G Labs. 5G Labs works with startups, academia, and enterprise teams to build a 5G-powered world. So with them, we work on 5G trials, hackathons, industry partnerships, prototyping challenges, and more. And you can always learn more about us, them, and upcoming events on our website Alley.com. So anyways, today, I'm gonna let all of our speakers introduce themselves to you in their own words, we've got a really amazing lineup, and I'm super excited to talk more about scaling. So Ferdinand, do you want to just kick us off with a quick intro? Oh, and also, I forgot, our panelists are in a lot of different time zones, so we've got at least a few people with a beverage of choice, whether it's a daytime beverage or not. So tell us a little bit about what you're drinking and your background.
Ferdinand Grapperhaus 1:36
Yeah, thank you very much, Noelle. It's great to meet you, all of you, in this session and I'm looking very much forward to this conversation. I run a scale-up in the Netherlands, PHYSEE. It comes from "physics" and "seeing" so "Physee" is the Dutch pronunciation. And develop and also integrate technologies that improve the energy footprint of buildings. So for one, technology, we integrate solar and sensors in glass, in order for glass to produce both power and data to significantly reduce the energy consumption of a building. But we also develop all kinds of coatings. For example, one coating for greenhouses, if you apply this coating on the greenhouse, it can actually accelerate plant growth with more than 10%. So you can use the same amount of land for growing more crops. And I think what really connects all these different technologies is that we're a very mission-driven organization. We really try. That's where our name comes from. We really try to look with a physics perspective at the world and improve it. Improve the way actually things have been designed over many years, but now redesign them with a more sustainable, more health mindset. And actually, it's my holiday. I just got off work for today, my holiday started. It's 8 pm in the Netherlands and I'm drinking my first beer. It's up to you, all the attendees, to decide whether this is a daytime or nighttime drink. I'm going to enjoy it, and I look very much forward to this conversation. Cheers.
David Ehrenberg 3:27
I love that.
Noelle Tassey 3:27
Awesome. Cheers. And thank you.
David Ehrenberg 3:30
Cheers. Cheers.
Noelle Tassey 3:32
All right, who wants to go next?
David Ehrenberg 3:35
I'd be happy to go. I'll jump in there. My name is David Ehrenberg. And I am the CEO and founder of Early Growth Financial Services. And the way that I always like to describe who we are is that what we do is not very sexy, but we do it in an incredibly sexy space. And the not sexy thing that we do is we're an outsourced finance and accounting organization. So in the same way Microsoft or Apple or Facebook has a CFO and then they have a finance and accounting organization underneath them, we provide the same services for our clients. We really have five key services. The first thing we do is CFO services. We have 47 CFOs. And they do everything a CFO would do in a larger company but on an outsourced basis. So budgeting, financial forecasting, fundraising, all those kinds of things. The second thing we do is transactional accounting. We have 95 senior accountants and controllers, they do all the day-to-day blocking and tackling for our clients from an accounting perspective. The third thing we do is compliance. We do everything under the tax umbrella, state and federal taxes, sales and use taxes, R&D tax credits, other compliance measures. The fourth thing we do is valuations, primarily 409A valuations, but we work with about 55 micro-venture capital funds. For those micro-venture capital funds we do quarterly and annual valuations as well. So those are the things we do. Not sexy, essential, important things, but not sexy. But we are by far the largest provider in the United States in the venture capital space. At any given time we have 800 to 850 venture capital clients that we're working with. 18% of all venture-backed companies in the country are clients of ours at some point in time in their life cycle. So almost one in five. We're set up in Seattle, Portland, San Francisco, Silicon Valley, LA, Chicago, New York, and we were in the process of opening up Boston when the pandemic open— started. And we've worked and helped a lot of companies scale, like Indiegogo and Zendesk and Uber, Platfora, Luxe Valet, and Gogobots, and Clout, Formspring, and Allbirds, and companies that started off very small— Stitch Fix— and really increase to a large, large size. So scaling something, I love talking about, and I'm excited to be here. So, that's it. Oh, and I'm calling from San Francisco. We're actually having an absolutely gorgeous, gorgeous, beautiful day in San Francisco. We've had this blockbuster week of weather. Although we're all still somewhat sheltering in place. And it is 11:11 for me, so I'm on my third cup of coffee. So—
Noelle Tassey 6:23
All right, probably a daytime drink.
David Ehrenberg 6:25
Probably a daytime drink.
Noelle Tassey 6:28
I do like a nice, like, kind of after-dinner coffee sometimes, depending.
David Ehrenberg 6:32
I do too. I do too. And I'm a big fan of Irish Coffee. I'm sitting right next to a bar that's got Bailey's and Jamison. I mean, I can certainly doctor it. Although I think it might not be the most—it might not be the best bet for my productivity for that.
Noelle Tassey 6:47
Well, it's a pretty day out. So— And at least one of us is already on vacation.
David Ehrenberg 6:55
Exactly! Jerk.
Noelle Tassey 7:00
Well, last but not least.
Ferdinand Grapperhaus 7:01
We're starting already.
Liat Karpel Gurwicz 7:06
Hi, I'm Liat, I lead eCommerce marketing at Wix, which is probably most well known for being a website building platform. But we also have integrated e-commerce systems and CRM, our own payment provider. So essentially all the tools businesses need to run their business online and get paid and manage their finances. Wix is no longer a startup, but we were once years ago, we're pretty big company today. We're a public company with over 3000 employees around the world. But more importantly, we power over 140 million users worldwide. And along with that, their businesses, so we get to see a lot of different businesses and startups start out and then build their way up on the platform over the years, So that's me. I'm in Tel Aviv, it's 9 pm for us so I am definitely having a nighttime drink. White wine. So cheers to all of you. And Ferdinand I am not going on vacation but I wish I was.
Noelle Tassey 8:20
Well, cheers. Hopefully, the next hour for all of us and for everyone listening can be like a little bit of a vacation. I forgot I'm drinking a daytime drink. I was trying to find something in my room that I could drink but unfortunately, it was just seltzer water in a mug. And I'm in Florida where it's 2:14 pm, so it's kind of hard to now daytime or nighttime drink, you know? I think in Florida for most people, it's just "a drink is a drink." Kind of like (inaudible), you know, 24/7. It's an interesting place. I miss New York. Anyways—
Ferdinand Grapperhaus 8:58
We feel you, we feel you, Noelle.
Noelle Tassey 9:00
Yeah, yeah.
David Ehrenberg 9:02
I miss New York as well.
Noelle Tassey 9:07
Hopefully, we'll be back soon. So anyways, I'm really excited about today's conversation. I think we've got such a unique array of perspectives. Everyone here's scaled a team or a start-up and has, you know, witnessed through consulting, service providing, or just hands-on, doing-it-yourself, experienced so many of the trials, tribulations, and rewards that come with scaling a company. So I guess to start off our conversation today, and by the way, for those of you listening, feel free to use the Q&A feature, I'll be checking throughout the conversation and answering questions wherever we can. When it comes to making the decision to scale, what do you guys think is the single most important factor for founders to look at as you're building your company? You're thinking about scaling up right off the ground, what's like the number one consideration?
David Ehrenberg 10:09
I think for founders when they're looking at scaling it— there's really two big factors that they need to be very aware of, they need to very much understand the opportunity from a revenue perspective. So from a sales and marketing perspective, and then they also need to equally importantly, if not, more importantly, they need to understand the resources that are going to be required for that effort. So— and that's, you know, that's a— there's a classic scaling mistake that we see startups make over and over again, and that our organization, Early Growth made, when we were scaling nationally, is that we didn't understand the resources. We didn't understand what it would entail to be able to support the scaling efforts. And I think that that's something that a lot of startups do not think about over and over again. Sort of what do they need to put into supporting these efforts and ensuring that they have the folks, the people, and the systems and everything else in place to support the scaling.
Liat Karpel Gurwicz 11:11
Yeah, I'd add to that, I think a lot of, I find early-stage businesses and startups have this like long-term vision in place, they already have the dream, the thing that they're going after. What they don't always very clearly defined for themselves are the more short-term goals and milestones. So what does success look like in six months? What does success look like in 12 months? And I think those things help you to kind of ground what you're trying to do and keep the focus for yourself and your organization as you're going through those early stages of the really, really challenging phase of getting everything up off the ground, and not getting distracted by things that you know, you would love to be doing maybe a year or two years from now, but that your organization is not ready for yet.
David Ehrenberg 12:01
We've talked a lot about— we talk a lot about milestone financing. So when our clients are raising money, oftentimes, you'll ask— you'll ask a company how much they're planning on raising, and they'll give a number. I'm raising— planning on raising a million dollars, $5 million, $10 million. And you'll ask them why? A lot of times they say, "Well, it seems like this is an appropriate amount at this round." Or "X Company is raising this amount" or "Y Company did this." But we really preach something called milestone financing, which really relates to what you're saying, which is, every time you raise a round to financing, you should have a very clear understanding of what concrete milestones you're going to achieve with that money so that you can make sure that every time you raise a round, it is an up round. So that you're— the valuation of your company is increasing every time you raise a round and that you're— so you're getting less dilution, so you're keeping more of your company. But in order to make sure that you're always increasing the valuation of your round, you want to make sure that you understand the clear, distinct milestones that you need to hit. And you need to make sure that you utilize that money to hit those key milestones so that you're showing the progress that you need to show to the outside investors. So I think milestones— milestone financing, but also thinking about your progress in terms of milestones is really, really key, especially if you have outside investors.
Ferdinand Grapperhaus 13:24
And maybe to finish the round, I, of course, agree with what both of you said, I think there's even more to add to it. However, really getting to the single most important thing, and I would like to throw into the ring, it's people. It's really, really, really, really, really people. And I want to expand a little bit on it because when I started our business six years ago, there were of course also investors who— and other partners who said yeah, we always— we always invest in people, and people are the most important. And it never really— and it did resonate, of course. But I never understood the true meaning of when people say that. And I think by now, I really do understand that even though you have the biggest vision, and even though you have the best milestones planned for in the beginning, and even though the first year or maybe the first two years, you can do it all by yourself because you're wonderfully talented, or you're— you just don't have any free time and you just have hyperfocus—
Noelle Tassey 14:27
Or both.
Ferdinand Grapperhaus 14:27
— If you really— or whatever, indeed. But if you want to scale, you cannot do this alone, and you cannot do it all. You cannot oversee it all. And you need the best people out there and you need them to work together in a very harmonious but not conflict-avoiding way. And to get there, it's the single most important thing that your first hires are the best because as soon as you start, your first hires are core hires, then that will expand. And then after a couple of years, you find out you didn't have the right people to actually make this plan work. And so I would really— I don't know— put my hand into the fire, to answer you that the single most important thing is really, what is the group of people you hire to build this product, dream, or enterprise or adventure with?
Liat Karpel Gurwicz 15:28
And then just, you know, on our end, when we look at either acquiring companies within our organization or creating new sub-units or business divisions, one of the key things that we look at is the team, right? I think that you're so right, that what ultimately makes the difference is the people and the team in place. And so I think it's always preferable when it's a team, right? Not necessarily a single founder, but a team of two or three. There is something so much stronger in that, they tend to be able to go longer, see the distance better. They have each other to kind of lean on and take it together. So I agree the team is so critical.
Ferdinand Grapperhaus 16:16
You've really had the chance and opportunity to already ping pong all of your ideas in those first very significant months or years of setting up your business. So, also coming from a founding team of three, I can very much relate to that addition that it's— I would have never been sitting here or being where we are today if I would have tried this by myself.
Noelle Tassey 16:43
Yeah. The other thing is, I mean, having the right team just makes it so much more fun, right? I think every like, founder or CEO goes through that phase of, you know, "oh my god." Like, you know, your team alignment's a little bit off, and everything is like so hard and you realize what's happening, and you correct it, and it's fine. I'm really glad we ended up on the topic of people management early. So— because I think scaling means different things to everyone. It's scaling, you know, number of customers and like market share, or you're scaling revenue, you're scaling employees. Hopefully, you're doing all those things at once, but I think scaling teams is often, for me, the way I think about scaling proactively because adding people can just change the equation so much as you grow. So I'm curious, you know, all of you have led teams and grown teams. From your perspective as a people manager, what's the single most important thing to plan for, aside from just hiring good people, you know, as you scale? And this, for me, this touches everything from you know, the really famous give away your Legos essay, where it's like, early employees doing lots of different things, and then starting to specialize and kind of managing through that transition, and you know, then experiencing the culture of your organization shift every time you add a certain number of people. I think somebody once told me, who was a VC, that your— the culture of your company completely changes every time it doubles, which, having been through this ride a few times now, I can completely say is correct. In my experience, anyways. But yeah, I would just love your thoughts on that, especially the team scaling.
David Ehrenberg 18:27
I would agree that every time you double the size, it completely changes, and so it's something you need to be aware of. It— and I also agree with the earlier comments about team. I would say that one thing that's very important when you're thinking about scaling, and when you're thinking about team, is that making sure that you get the right— the right person for the stage that you're at. Because there's folks that are really good at different stages, and that can really execute at different stages. And so understanding what someone's capabilities are, and making sure that there's a good fit between where your organization is, and who that person is, right? So I mean, when you're opening up a new market, making sure that you're hiring someone who has expertise opening up that market and has been with a company successfully at that stage and helped navigate through that process and making sure that you have— you know, there's a huge difference between a Chief Marketing Officer for a publicly traded company and your first marketing hire at a startup, right. And there's, you know— and understanding what those capabilities are and who can play in those different realms is very important.
Noelle Tassey 19:33
Definitely.
Ferdinand Grapperhaus 19:33
Yeah, I agree.
Liat Karpel Gurwicz 19:36
I think, you know, even today as we continue to scale, we're a huge company, the issue never goes away. I think it's kind of the balance of continually investing in your existing employees. So you want to make sure that where you have talent, you're developing the talent, you're attaining that core culture, you're allowing them to kind of continue those values on and continue to grow with the things that you really built and appreciate within the company. And then also understanding, like David said, how you bring in strong talent from the outside, because I think, actually, the more you grow, and the bigger you get, the harder it is. Because you're not at those initial stages anymore, where you're all kind of coming together as a team for the first time and figuring it out, you know? When you bring in those strong (inaudible) at later stages, it's much more challenging in terms of making sure that there's a culture fit, and that they get along with the team, and that, you know, everyone makes room, everyone understands how to work together. So I would say it's a bit of both. And you know, they require different efforts, but I think you need both of them. It's not one without the other.
Ferdinand Grapperhaus 20:47
Yeah. And to build on that, I think, what— if you're a founder and you're either starting your business or you're trying to scale it further, you hear these mind-blowing examples of Netflix not having any leave day— counting any leave days, for example. Or you'll always hear— apologies— you'll always hear the examples of supercool policies and— or things that you should do to get your employees on board. But that's— you know, that— those are the things that you hear, and they're actually still so far away. And you know, maybe from where Wix is now, it's already very close or it's already reality. But I think as a founder, you will have the responsibility to not get lost in those faraway promises. It's actually much more relevant and it's much more short-term, that it's just about really, as you said, investing in HR, investing in training, investing in— and that might sound even boring because it's not very startup-y, so people tend to steer away from it and only start with Shared Services after a long time. But often I see actually then you're too late. So start also with the boring stuff, because the more boring stuff gives people— yeah, some stability as well, that they know they can always count on some support, or someone looking after them, or when they have questions on their contracts or questions on even right now what's going on in a COVID-19 situation today if people have confidants to rely on, I think those are very basic ways to take care of your employees, which startups tend to forget in the beginning, because they're so hyperfocused on executing on their goal.
Noelle Tassey 22:54
So, I'm curious on that note, what number employee— or I guess at what number of employees do you think a startup should absolutely have in-house HR?
Ferdinand Grapperhaus 23:05
It's difficult to say because it of course really depends on the type of business. But I would already recommend it from 20— 20 onwards. And I think you can never be too soon. Because what David said, I think also the— not only the type of person changes that you need in every phase but also the type of work changes. So let's say an HR advisor, or maybe financial controller in the beginning has different priorities or different responsibilities than later on. So if you manage to find the person of which you think the person actually can grow along, if you also invest in the person, then you can never start too soon.
David Ehrenberg 23:50
I think it depends on what your leadership team looks like, what your CFO looks like, or your COO looks like, depending on if they have that expertise and have played that role before. Certainly, by the time a company gets to about 50 employees, I think it's essential to have a dedicated person that's in the role just from a pure sort of payroll and employee benefits perspective. Going backwards a little bit when we were talking about starting out and starting up with culture, and I agree with Ferdinand, that you want to have those building blocks and those nuts and bolts in place. But I also think it's incredibly important right from the very beginning for the leadership team of an organization to actively talk about culture, right? And talk about what culture means to them, and what kind of culture they want to create, and what they can proactively do to create that kind of situation. And I think if you have those types of conversations on an ongoing basis, I think that over time, those— that will get more layered into your organization and into all of your different policies and procedures. As long as you keep it relevant, you can layer it in over time again and again and again. So I think having those cultural conversations is incredibly essential, even when a company only has five or six employees. Talking about sort of, what do you want to create? And then Noelle, when you have that situation where you're doubling, and the company is changing, and the culture is changing, you're at least having that guiding light that's there.
Liat Karpel Gurwicz 25:22
Yeah, absolutely. I agree with David, I was gonna say more or less the same thing. I think from the get-go, somebody has to be responsible for HR. So it's not necessarily a dedicated role within the organization. But there's somebody whose job is just think about that and to be in charge of that. And I think that those conversations about culture are so important. They— more than just making sure that you're continuing to embed the culture as you move forward as an organization, mean that as your hiring, that's always Top of Mind and that you're choosing people that are a good fit for you culturally and will help you to continue to grow that culture.
Noelle Tassey 26:04
As leaders and people managers, how did you all sort of decide on what kind of culture you were trying to build, or did you let the organization dictate that a little bit as it scaled? I found in my experience, it's quite hard. You can walk in and say, this is the kind of company I want to run, and then everyone that you've hired is sort of like—
David Ehrenberg 26:21
I think it's— I think it's interesting. Ferdinand brought up earlier, he brought up the Netflix example, right? Ferdinand, do you remember, like 10, 11 years ago, everyone was kind of looking at the Netflix example? For us, because we have all these different CFOs that are working with all these different early-stage companies, they tend to get involved in these culture discussions very early on. And we have a lot of conversations with our clients about: "Hey, do you want a culture like Netflix?" Is this— where you're sort of super empowering your employees? But you know, the way that Netflix ensures that they can keep their quality really high is every year they lay off their bottom 2%, right? So there's a harsh side to sort of the Netflix culture but thinking about that from an early point on is really, really important. And it's something that our CFOs do actively and my background is as a CFO, so— and I've run HR departments before, so it's something that I've always thought about a lot. For Early Growth Financial Services, when we first started out, we had sort of this basic idea that we had this— we had this Good Person's Guide, which is sort of "what would a good person do?" And sort of what's the right appropriate— what's the right, appropriate approach? And it involved really taking our personal ethics and our personal morality and making sure that they were playing forth in our company, and that the ethics that we had in our personal lives were ethics that we were transporting into the company. And then as we started to grow and build our team and bring on people we took that sort of basic framework and made it a lot more concrete and actually came out with some different value systems. And now we actually have a cultural award that we give on a quarterly basis to an employee who sort of embodies sort of our culture and our value system that we espouse. But we were very concrete about how we did it along the way. We've always been a remote organization, we have 170 employees, and we've always been remote. And so that's always also factored into our culture and sort of how do you create culture in the kind of environment that we have. Our consultants, each have five or six different clients that they're going on-site to on a regular basis. So oftentimes, they feel a little bit more established in the culture of our clients than they do with ours. So we have our own challenges. But those— and we've had to work through those challenges as we've gone on, but it's been a constant line of dialogue. It's been something that we're always talking about, and we're always trying to deal with, and certainly in the last three and a half months during COVID, it's something that we've— it's been especially important, right? So how is COVID impacting our culture? And for us, it impacts it less because we're already a remote organization. But it's still —
Noelle Tassey 28:34
— an audience question about exactly that, that I was gonna— that I was gonna pull in. And this is probably a good time to kind of get everyone's thoughts on it because you've got the unique perspective of building culture remote first. I think the rest of us— at Alley where we've always been partially distributed, but like the bulk of our team was in one place. And especially as you're scaling or planning to scale, while suddenly remote, you know, what's some advice and an experience that we can kind of bring to that from everyone here?
Liat Karpel Gurwicz 29:47
I think that we're probably in a similar situation to you, Noelle. In some ways, we have experience because we have sites around the world so we're used to working with different groups that are located in different areas. But on the other hand, all of those groups always worked within office environments. So it's not like we're all just remotely located and used to working from home. So there's definitely been an adjustment for all of us. I do think that you know, as a tech company, it's been easier for us because there are huge elements to what we do anyway that are online and in video calls, and in working with other groups and teams. So I think that the— I'll say the work aspect of it has been a little bit more straightforward. But David, the culture aspect has definitely been a challenge for us. You know, how do you keep up team spirit and morale? How do you maintain that connection? That's something that we haven't had to do solely online ever before. And I can't say that we're— we fully cracked it. I mean, we're working on it all the time, and we think about it a lot. But it's definitely something that's new for us and that we're figuring out as we go.
Ferdinand Grapperhaus 31:01
Yeah, I can recognize that very much. I think the past months we've— maybe to give it again, as well a bit more context, is that what I think— and I think you must recognize it in your business as well, Liat and David just explained to us his own complexities of the culture. But we— before the COVID-19 situation, we were very much engaged even though not all together every time anymore because we were past that stage. Still, there was a lot of room for freedom, creativity, brainstorms, problem-solving, going to customers, bringing technical people, bringing salespeople, and so on. And I think the difference between that way of running your business, that way of having an organizational culture compared to everyone working from home, versus the difference between a nine to five job working in a cubicle and then having to switch to go work at home— from at home. It's a much bigger difference. People really went from this very joyful environment into working from home— not saying that home isn't a joyful environment, but we really experienced it. We maybe even had to fight even harder, even though our culture was very strong and good because people felt different so strongly and got isolated— that they got isolated as well. And even though I think we did all these little things to create a culture still— to have a virtual coffee corner that always whenever you want to work together with a colleague or drink a coffee, you go to the virtual coffee corner. Or, we organized a weekly— we have 15 different nationalities, I think you must have many more, but we organized every week that one person was giving a cooking workshop for online virtually so then you get to these situations where everybody is on their stove baking or frying or whatever with their laptop. And even though we tried so hard, still we end up as well with people getting— having a burnout because they were too isolated. So I think it's— it definitely should be a new topic also in panels like this, but also in start and scale-up research specifically, how to keep the culture alive, even though you master remote working.
Liat Karpel Gurwicz 33:49
David, I'd love to hear what you guys do because Ferdinand, you know, I'm laughing because we did the same thing. I've been like, cooking with teams— and all that stuff.
David Ehrenberg 34:00
Yeah, I love the idea of a virtual coffee. I love the idea of a virtual coffee room. I think that's a fantastic idea. That's a wonderful idea. So we've struggled, you know, we've really, really struggled with it. So to a certain extent, because we're remote and because of the way that we're set up, we attract a certain type of person. So we have 95 senior accountants and controllers. The majority of those folks are working mothers. So they're folks that have a BA or a BS degree in accounting or finance, about 50% of them have CPAs. They worked for eight to 10 years in finance and accounting roles, and then they had babies, and they've come to us because they love the ability to work from home, and they go into their client sites once a month. And, you know, it's very easy. So if you know— if they're in New York, they can be out on Long Island and maybe they come into Manhattan three afternoons a month, and it's very easy and they sort of go around their own schedule. And most of our CFOs— we have 47 CFOs, they tend to be folks that are in their mid-to-late 50s. And they've come to us, and this is the last job of their career. They've come to us because they want work/life balance. They love working with early-stage companies. They love the excitement of a startup. But oftentimes, they've already made the majority of their wealth, and they— they're doing this because it's something that's a lot of fun for them to do, and they're enjoying it. But so— to a certain extent, we've attracted people that they like that flexibility of being able to work from home. But it's always something that we've struggled with, and it's not a— we've never been able to completely master it. So we're in seven different cities. We, on a quarterly basis, we do events in each of those cities. So three times a year, they're— rather, they're smaller events. And then we do one sort of big, big, large-scale event. And we do those with our employees. In the Bay Area, I do a monthly Meet The CEO Lunch when we're not in COVID times and I have lunch with everyone in the Bay Area at least once a year. We have special awards that, you know, are supposed to be emblematic of our— of sort of the culture that we're espousing, but it's something we've really, really struggled with. We've got a 42-person corporate team, and I'd say that that team has— is unified. That team is working together constantly. They're doing meetings together. They're constantly on Zoom calls and conference calls. They— that team is tight, but we've really had a hard time sort of pushing that same culture out into the rest of our employee basis. It's been a struggle. I mean, there is certainly— there are certainly disadvantages of remote working, right? And I think we're all sort of seeing that on a grand scale. I think every— most companies are experiencing what we've been experiencing for the last 12 years and we don't have— we don't have the right answers. I mean, for us, the model works but you lose on culture. There's no question you lose on culture.
Noelle Tassey 37:04
Yeah, I really miss— I miss being in the office with my team so much. And I think for us, it's just been— it's been interesting from my perspective, like we've always, like I said, had a distributed element of our team. And those have always been like smaller pods and pairs of people. And then like the bulk of the team in New York, and I think one thing that's been great to come out of this is like, now everybody is on Zoom for like town halls and stuff. So we're like, experiencing— I would say that we're prioritizing the remote dial in experience, which I think you know, from the feedback we're getting is great, because now our remote teams aren't dialing into a room full of like 20 people drinking beer and talking loudly, with like, no ability to answer questions or hear anything. So that part of it's good, but you know, it's definitely been tough for us to them, like take that culture, shift it, democratize it. I mean this— I love doing these panels, one thing that this is kind of making me think is after this I'm going to be looking at buying like you know, some used tablets maybe and see if we can just get those to everyone on the team. The coffee corner thing is great like having the ability to just join anytime, like, if you're working, you just kind of want like that osmosis collaboration.
Ferdinand Grapperhaus 38:20
Yeah, my people do that as well. That you're just while you're working, you just have the audio, some others and when you see something funny and you want something to share, you don't have to first dial in, you can just speak out loud. You can all change to the same background, I think sort of boring. Someone went to the office took some pictures, and then in the Zoom our teams' backgrounds, they then have the all together the same coffee corner background. Like, you should also let things evolve a bit once you inserted them.
Noelle Tassey 38:54
Yeah. (inaudible)
David Ehrenberg 38:55
Are you using Slack? Do people use slack? Does that—
Liat Karpel Gurwicz 39:00
We use Slack.
Ferdinand Grapperhaus 39:03
You use Slack, Liat?
Liat Karpel Gurwicz 39:05
Yeah, I mean, we have a bunch of different systems we use, but we definitely use Slack. First of all, whenever we're working with developers, Slack is a hit, they really love it. So you know, there are different parts of the organizations that use different systems. So I wouldn't say all of our communication happens there. We actually also use WhatsApp a lot. It's a really big tool for us. There's something about like, the immediacy of it, the fact that it's on your phone, it's easy, you can get people so you know, different kinds of communication happening in different channels, not always in the same place. We also do a lot of Zooming. We ask people as much as possible to have video on so that we're keeping the human connection there and you're not kind of just talking into a blank screen and you can kind of read the reaction that you're getting on the other end. So— but obviously, that's not always possible, and I think, you know, I find that there's some level of Zoom fatigue, like, people have kind of, you know, they're like, "Okay, we've done this for this long, we can take a certain number of hours a day, and then we just need like, the video to go away."
David Ehrenberg 40:24
Our CFO team uses Slack. So we have 47 CFOs, and they use Slack. They're constantly exchanging ideas and asking each other questions. So things are coming up— so for example, one of the big things in the United States with COVID was there was a bunch of small business administration loans that were available. So—
Noelle Tassey 40:44
I've been that swamped for like—
David Ehrenberg 40:48
It was a terrible process. It was awful. No, it was a fucking nightmare. Sorry, excuse me. It was terrible.
Noelle Tassey 40:55
No, you can't describe it without swearing.
David Ehrenberg 40:58
But they use— but, so like on the PPP loans, our CFOs are constantly talking and exchanging information. And so that— and I think that helps a little bit with the culture in that there's this constant dialogue. They're not with each other in person, but they're sort of in each other's backdrops throughout the entire day. And that's— we found that Slack has been really nice for that team in particular, because it's a quick, you know, immediate exchange of ideas.
Noelle Tassey 41:25
Weirdly, you know, there's also— there's just nothing like that kind of large-scale shit show, like something like the PPP to really bring people together, like, together and no one has any idea, that really unites people.
David Ehrenberg 41:39
It is a complete fiasco. Well, for us, I mean, obviously— so we've got like 800 clients, most of them were looking at— at least looking at the PPP loans. And then we also went through it as well. And our own personal journey through it was an absolute fiasco. I mean, the whole thing was just a mess. So the two of you are very lucky not to be in the United States right now. We are not— we're not handling any of this very well.
Noelle Tassey 42:00
Yeah.
David Ehrenberg 42:02
We're really dropped the ball.
Ferdinand Grapperhaus 42:04
I didn't want to say it, but I think we're— everybody's struggling all over the world. So, no vertical lens, but I understand where you're coming from.
Unknown Speaker 42:23
(inaudible)
David Ehrenberg 42:23
I'm gonna be quiet now, Noelle.
Noelle Tassey 42:25
Look, I've been quarantined in like a closed facility. I haven't seen a car in like 103 days and it's because you know, you can't go outside. So it's great. Anyways, so, I do want to make sure we cover— 'cause I know we've only got like 12 minutes left, just a little bit of like the back office stuff that you need in place to scale. So we've talked a lot about HR and hiring, leadership. But there's also so much on like sales, marketing, scaling up your digital presence. I know that we've got a lot of expertise on this panel around that. And then also just some of the back office pieces. So Liat, I'd love to just like, hand it over to you in terms of some of the challenges that you've seen and mistakes you've seen startups make in that space as they scale or just things to look out for.
Liat Karpel Gurwicz 43:21
So, I think that many businesses have a great product, or at least a really good idea when they start out. I think that where it tends to go wrong is when they don't necessarily think about who exactly the customers are going to be. And can get caught up in how good the product is that you don't think it all the way through in terms of who these people are. How are you going to reach them? What do they like, what don't they like? Where are they? You know, what are they doing every day? Are they on Facebook? Do they read email newsletters? You know, where do they shop? So I would say get hyper, hyper-invested on really, really understanding your customer. And it's not a one-time effort either. You know this is something that continually shifts. And I think, you know, that's another thing that we've learned through the COVID-19 experience. Even businesses that really did understand their customer base and had a great product-market fit, had to find ways of pivoting because their customers were behaving differently. They were impacted, they were shifting their consumption to different channels, they needed different things. They had different spending power. So I think it's something you need to continually invest in. First of all, who are your customers? And then also how you're going to reach them. And then going back to something that David mentioned right in the beginning, I would say, really understand where you're gonna put your investing power because every channel that you use is going to cost you money, it's going to cost you time of your team, it's going to cost you resources, and it's actually going to cost you dollars, in terms of the marketing efforts there. So I would choose the ones that are relevant for your current efforts, I would really ask the question of "what am I trying to do now?" Am I trying to reach new customers? Am I trying to reengage existing customers? Am I targeting people who are actively searching for something? Ask those questions and then choose the right channel and start there. The channel you use today might not be the channel you want to use in six months' time. So definitely, there's always going to be an element of testing and optimizing and kind of shifting those things as you go along. So I would say, don't be afraid of testing. Don't be afraid of making mistakes, but just be really focused on what you're trying to achieve and you know, where your customers are, and then adjust accordingly.
Noelle Tassey 45:47
Definitely. David, do you have anything on that? I'm sure with your experience—
David Ehrenberg 45:53
I think— I mean, I 100% agree with that. And also going back to the earlier comments just in terms of people and how important people are, I think as you're scaling and you're thinking about your back office, also understanding at what point you're bringing in different key hires, right? So we talked a little bit about the HR hire, but also understanding, you know, at what point does it make— what point does it make sense to bring in a Chief Revenue Officer? At what point does it make sense to bring in more of a senior-level executive around the marketing function? At what point does it make sense to bring in more of a Chief Operating role or Chief Financial Officer-type of role, and then understanding when you need to bring in those different levels. I think that's very important. And as you think about scaling, think about who is the right fit for those different places. And that has to do with, you know, when you're pushing out into the market, when you're actually— you know, have more customer-facing activities. If you're thinking about it in terms of a venture capital type of a round, you're thinking about it around a growth round of capital and what that entails and what you should be thinking about. So just thinking about people in terms of scaling from back— from a back office perspective, and also from a forward-facing perspective. And then the other thing that you just want to make sure that you're doing right from the very beginning, and Ferdinand talked a little bit about this earlier, is making sure that the nuts and bolts are put in place right from the very beginning. So that you're laying a really strong foundation. And I'd say that that strong foundation is incredibly important from an accounting perspective. So making sure that you're— right from the very beginning, you're accounting for your expenditures in an appropriate way and making sure that you're setting up good systems so that you have financial integrity in your numbers, but also from an HR perspective. So making sure that you're doing all the right things from an employee contract and an employee onboarding perspective and all those types of things. But spend the time right from the very beginning to make sure that you have a really strong accounting and HR platform and it will pay off in huge dividends throughout the entire time that you have the organization.
Noelle Tassey 48:01
So, one thing— Yeah, so one thing you brought up, I would love to get like everyone's take on this, right? Which is the COO hiring piece, because I have gotten all kinds— I've heard all kinds of advice on this, and I think it's always so interesting. So, you know, a lot of people have told me if you don't start off with a COO that's like a co-founder, you know, you really can't like, hire from outside for that role, you have to like identify— it's not like a Day One. It's like identifying talent within the company, coaching them into that COO role, hiring somebody who has that potential for growth. I'm just curious, you know, and I think the COO role, it's an interesting one, it's one I've held in the past, you— kind of you're in that seat, and every company's COO is like always different. It always depends on the CEO relationship.
Ferdinand Grapperhaus 48:51
I think that's exactly what it is. So I think it's also very difficult what you're asking from us right now. Because in all the different ventures I've seen from different perspectives, I've never seen a COO role which is identical or similar, even. Every— like, CEOs, okay, they always tend to sort of try or need to be the same person. Same goes for CFOs. It can be a bit more risk-mitigating or a bit more strategically funding. And the same goes for commercial CEOs. COOs— never the same role. It's just, it's always— it's— maybe it's— because what I wanted to share earlier on your previous question is, if you're scaling your business, you need to go from that startup phase to that scaling-up phase and I think it's— we look at it in there are two S curves. And your first S curve is when you've got exciting customers, and they're thrilled, there's innovation, and you think this is going to be it, but you only just reached out to the innovators, you have only found these innovators, and it will saturate and you need to find your second S curve. So the first S is startup, the second S is scale-up. And the only thing I would want to say now, getting back to this question, is you need to find a COO that will sort of find out what is needed for that second curve, that second S. And a COO should learn very much from like, your beachhead market, it should learn a lot from the exact right type of processes that you need. The best sales methods that work, how to install different pipe drive, or whatever software you're using. So it's— the task is more for a COO to truly understand what that curve for the organization we're talking about needs to be, and then live up to that role.
David Ehrenberg 51:02
I would— so I think it's funny, Noelle, my last two roles before I started Early Growth, I was a CFO and a COO. So it's a— I agree with what all three of you have said, it really varies. But I'd say the most important thing with a CFO is to first identify what they're going to be responsible for, what their role is, and how they do fit in the organization. Because it is not standard. It really does vary based on the company. And I look at what our COO is doing right now, versus the COO job that I had at my last two companies, and it's completely different. But so the— you know, identifying what exactly this person is going to be responsible for, you know, what tasks they are going to own, sort of where there's overlap between the CEO, where there's overlap between the CFO, where there's overlap between the CRO, but really having a good understanding of what tasks are going to perform and who that person is in the organization. And that can help develop a lot of things, right? Sometimes the COO is more like a president or a second in command. Sometimes it's just someone who's taking care of operations and nothing more. Someone is— sometimes it's someone who's running admin in HR. I mean, identifying sort of who they are and what they're going to be responsible for, is very key.
Noelle Tassey 52:17
Yeah.
Liat Karpel Gurwicz 52:19
Yeah, I would say at Wix— and we're a big organization now, but our COO, who is, by the way, President and COO at Wix, has been with the company almost from the beginning. So he's not a co-founder, but he's definitely a very early member of the team. And I think one of the amazing things that he's done in addition to being a great COO, is really figure out how he establishes is a great culture. For I'll call them the other mini-COOs of the different business units within the organization. Because at the scale that we're at, we need many different COOs for different parts of the organization, and they do all look slightly different. So it's not that it's the same role for each of those positions. Each one does something different depending on the stage of their product, their business unit, what they're trying to do, what they're trying to achieve. But I think that they all do it with the same spirit that Nir, who is our COO does it. And I think that that's been a really great achievement on his part and kind of what helps shape that role however much it varies in the different places within the organization.
Noelle Tassey 53:32
Awesome, we had— you know, and I just want to jump in because there's an audience question that came in about IT. We're obviously not gonna have time to get to those topics. We're running into our last minute but if you are interested in learning about scaling up IT we're doing a monthly series with Electric AI on this topic. And also, we used them and they totally helped us scale our IT with no headaches, which is great. They kind of give you like— whatever— yeah, I actually could talk about this for ages and they're not paying me to, but for the person who wrote in, there you go, join us. It'll be fun. I'm really sad. We are nearing the end of our hour, which means that we'll have to wind down. So I want to thank all of our panelists so much for the hour, the expertise. It's been a great conversation. And hopefully, for those of us going on holiday, it felt like an early start.
David Ehrenberg 54:28
Have fun on holiday, Ferdinand.
Noelle Tassey 54:32
And a big thank you, obviously to all of our participants for joining us, anybody who would like to share this with their community, we're going to be uploading a recording to our site, Alley.com. And definitely feel free to join us on an ongoing basis. We're doing about two of these a week, as long as we're in quarantine, and probably for a long time after that. So thank you all so much. This was really fun. Great talking to all of you.
David Ehrenberg 54:56
Noelle, this was awesome. This was awesome. Thank you. Thank you.
Ferdinand Grapperhaus 54:58
It was awesome. Thank you very much, bye-bye.
David Ehrenberg 55:01
It was good to see all of you.
Noelle Tassey 55:03
Take care.
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