Most growing pains have a common ancestor: information compression š§¬
It isn't information overload that deters a team; prepping for a fundraise with purpose; and coaching reps on the complex depths of enterprise sales.
Hi there,
Welcome to the twenty-third edition of The Baton. A fortnightly newsletter that brings you three, hand-curated pieces of advice drawn from the thoughtful founder-to-founder exchanges and interviews taking place onĀ RelayĀ and the interwebz. So, stay tuned!Ā
In this edition, youāll find instructive and inspiring pickings from the brains ofĀ Scale AIās Alexandr Wang, Help Scoutās Nick Francis, and Writerās May Habib.
#1: Countering silos, or āwhy the wrong thing happensā ā Scale AIās founder and CEO, Alexandr Wang on how most growing pains can be traced back to something we all excel at: āinformation compression.ā And what theyāve done about it.Ā (Source: Rational in the Fullness of Time)
The real world is complex. For almost anything, there is some grisly reality filled with nuance, nonsensical complications, and randomness (āwhatās really going onā). But, when we communicate with each other, we usually speak in a handful of complete thoughts. When Person A has to communicate a complex idea to Person B, she invariably is going to leave out a lot of the details and say something accidentally too simple.
This process of translating the mental image of a complex system to something human-readable (usually words or pictures) is information compression, and what Person B then understands from that message (āthe compressionā) is the decompressed image.
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You can start to see why a small startup (<5 people) can be so efficient. Everybody is seeing everything else thatās happening, both internally and with the customer. So, the shared context is very strong, both internally and with the customerā¦
On the other hand, in a more āsiloādā company, when āhandoffsā happen, thereās generally very little shared context, nor are the priors generally shared between individuals on separate teams.
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If you spend the time to actually feel the pain of the problem and deeply understand it, then you donāt need to rely on some lousy compression and you can solve the problem head-on.
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Thereās many forms of this:
Dogfooding is very important. Everyone at Scale should spend time labeling data and training a model.
Curiosity about the customer problem is arguably most important thing while selling. They wonāt tell you outright enough information because all information compressions are bad. You need to really fill in the gaps in your understanding to be able to reconstruct an accurate decompressed image.
Coders should learn to do other things and vice versa.
Get in the weeds. Donāt be afraid to spend time gaining a huge amount of latent context to properly understand your problems.
Hiring from your customers can be incredible for your product because they bring a lot of context on how you can do things better.
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The ultimate hack is to not rely on compressions at all. Be an engineer, salesperson, support representative, marketing person, operations associate, and develop uncompressed understandings of how everything works together. That has been the key to every great product I know of.
#2: The scrupulous efforts that must precede fundraising ā Help Scoutās co-founder and CEO, Nick Francis, on the determined, purposeful, pre-raise prep he abides by. (Source: Help Scout)
One thing that catches people by surprise is how much time and effort it takes to run a fundraising process. Since millions of dollars are at stake on all sides, donāt be surprised when it takes a whileā¦.
Every time I fundraise, I take the following steps to make things go as quickly as possible.
Create a compelling vision. The first sign that Iām ready to fundraise is when I can make a great case for rocket fuel. When you have a good business thatās capable of being a great business with more capital, itās compelling to an investor. Spend a lot of time getting this story right and testing it on people you know.
Set time aside. Outside of required strategic meetings and 1:1s, I clear my calendar and spend every waking moment focused on the process. Work on the pitch, schedule some meetings, continue your education, keep moving forward at all times. If you fundraise part-time, itāll take twice as long, itāll be harder to close a deal, and youāll be distracted from the core business for longer.
Work towards a decision date. When you operate profitably, walking away is always a viable option. Use it as leverage. When I run a process, we set a timeline and share it with investors upfront. If we donāt feel 100% about moving forward by the end, weāre prepared to walk away.
Get all the data in order. This will vary depending on the type of business you run, but at a minimum, youāll want audited financials for at least three years (assuming youāve been around that long), detailed customer/business metrics, and legal documents. Being organized, transparent, and responsive with data requests is a great way to impress potential partners.
Have a partner. Fundraising can be lonely and the work can be overwhelming unless you have a partner. In my case, itās Shawna, our CFO. She handles the data requests and legal back-and-forth, but also is a thought partner along the way. Weāre debriefing after every call and strategizing about the next move all the time. I couldnāt run a process without a partner like her.
Build a list of investors. The better you understand the ecosystem, the easier it will be to identify investors who are a great fit for your business. Donāt just pick the folks who are in your inbox ā put the time in to find people with a proven reputation, aligned values, and comparable companies in their portfolio. Itās even better if youāre able to build a relationship over a couple of years before talk about a fundraise.
#3: āTeam x use caseā ā Writerās (Formerly Qordoba) co-founder and CEO, May Habib, on coaching their enterprise reps for both method and ambition.Ā (Source: Protect the Hustle)
Training is everything. The framework that we use, we call it a wedge. And itās basically āteam x use case.ā So, in the thousand ways that Cisco can use us, what is the āteam x wedgeā thatās actually going to get a deal done.
And from a training perspective, youāre right, itās hard. Because youāre basically coaching a rep to be able to see that, anticipate that, and pattern match.
So itās two things.
We bring the whole wealth of the organisation that came before them. So the CS reps whoāve onboarded people and implemented. The reps whoāve been successful before them. The founders whoāre listening to calls to really give guidance and coaching.
And in our sales reviews we actually separate pipeline from deal review. So that we can go deeper on a particular deal. We could help reps really see that. The other thing weāve done is record me and some of the other early folks talk about how Braintree uses us, how Marriott uses us. What were the workflows before and after.
When you actually hear it in the voice of the person that was doing the selling, a new sales rep can almost think of it as their own lived experience. And thatās the kind of confidence that you actually need to train for. As if they were there in the room right when a customer made the switch, when their onboarding happened.
Recently on Relay:
AMA (upcoming): With Pipedriveās co-founder Timo Rein. Next Thursday (July 1st), weāre excited about hosting Pipedriveās co-founder, Timo Rein. For more than a decade now, Pipedrive has shaped what it means to be a truly global SaaS. Founded in Estonia, even two years in, Pipedrive was available ā not just the website, but the product and the customer support they offered ā in six different languages. That far-reaching a GTM approach (and impact) is still rarely seen. And it kicked-off their enduring eminence in the forever-competitive, CRM space.Ā So, be sure to tune in as Timo recounts lessons from their journey!
Until next time,