This is an experimental post/set of posts. While many of our favorite podcasts talk about starting a new business, few actually get into the details of how to run a real business. I recently founded a company that raised over $100 million from “top tier” venture capitalists and needed to quickly become operational across NYC and North Carolina offices. While I have an MBA, as you might expect it was 95% useless for any of the below
I’m sharing with you the hard fought lessons that I’ve learned over the past year as we grew from 2 to 6 to 15 and plans to grow to 40 employees in short order. These posts will include both general strategic approaches and highly specific tactics/recommendations (the kind that almost no book ever gets into as they inevitably become out of date). Please tweet @podcastnotes on twitter or comment below if you have questions, suggestions, criticisms or requests.
The below covers Major Operational/Finance components of a business. Regardless of what you do, a lot of the blocking and tackling will be consistent. Every company has payroll, financial reporting, IT systems, etc.
I will dig into more detail for many in future posts:
Venture Money: Read Venture Deals: How to be Smarter than your VC and The Hard Thing About Hard Things (don’t miss the section on “The Struggle”, but skip tech specific sections if not applicable to you). Avoid preferred liquidation clauses (lets your VC get paid by 1 or multiple times their cash before you get a cent), equity buyback/Bad Leaver clauses, lock down non-dilution of your shares if you can for future rounds, and talk to startups who have taken money from the same investors to understand the pros/cons (not all $$$ are made equally, be careful who you get into bed with).
Wework: They can be negotiated with… a lot, especially if you can sell them on your potential growth (read: more offices) and can commit for a year. Over 25% discounts can be achieved.
The Bad: Unless you all quietly code and never use the phone, cramming people into their larger offices sucks. Their glass doors do not limit noise and if you are close to kitchen you will listen to their music all day, and god help you at lunch time. It’s not a good sign that the few phone booths are always in use. If people find refuge in small, dark, cramped, windowless spaces, the offices must be a nightmare.
The Good: WeWork is great if you don’t need full-time space, but eventually you’ll need to find a permanent home (that is an entire post on its own). How to conduct a search, negotiate terms, negotiate a lease, plan build-outs, etc. will need to wait for a future post.
IT Support: Get Remote/”Managed” IT support to cover your laptop setup/security/etc. You can add on hourly blocks for on site help if you need or just use WeWorks local IT people. They should be able to setup your O365/Mimecast logins directly (see below)
Security: See above. Mimecast works well, get IT to flag external emails as [EXTERNAL] in the subject header, you will get spoofed and phished as soon as you announce having any money, warn your staff.
Laptops: Lenovois just a default for many companies and you pay a premium for them, Microsoft Surface Laptops are actually great and a better deal even once you upgrade RAM/Processing. Their screens are gorgeous. I don’t see the point in a Mac these days, minimal improvements for 5 years and over-priced. PCs have caught up.
Monitors: If people like having 2 monitors, just do it. They are cheap. Just go with something that has “EPS” from a known brand (e.g. Dell, HP). We bought a lot of these from HP
Phones/Teleconferences/Videoconferencing: If you need actual phones/phone lines then go with Ring Central. You’ll get reliable VOIP service, TC and VC (utilizing Zoom for videoconference) all in one place. Pretty affordable. If you use your cell only, then Webex is the upgrade option and Zoom/Join.me would be the more affordable option.
O365 Suite:Unless you are Mac fanboys/girls go with the standard and use Office, you can get 0365 file backups too if needed. I’m curious to see if Teams will be a legit option vs. Slack, as they can so easily integrate off the Office programs/files.
File Sharing:Egnyte is actually great, but Box is another growing standard for business. Dropbox doesn’t really work in a corporate setting in my opinion. I have always hated Sharepoint and don’t care that they’ve updated that garbage (yes, I won’t even link to it). Setting up appropriate security is essential, especially with external parties (ideally only after they sign a confidentiality agreement)
No lawyers are free, they want to get paid once you raise your series A, AND your investors will make you pay their lawyers too (try to pre-negotiate/cap these fees).
After you launch, you’ll need different lawyers for different work like HR, General Contracts, overall Corporate support.
For Contracts (CDAs, MSAs, etc.): Find cheaper lawyers to review and create useful templates, don’t try to just review the contracts yourself. Get them to focus only on what matters, not mark up the whole thing and bill your wasted efforts.
Legal Budget: Take your legal budget, double it and hope it isn’t even higher.
Docusign: Worth every penny, use it to sign EVERY SINGLE DOCUMENT so nothing is lost. Also save to your files sharing system with a folder for every external party/vendor.
Silicon Valley Bank: They “get” venture companies and how to work with a company with no sales or credit. They will give you credit cards without any personal guarantors (they can also give letters of credit to landlords to avoid big deposits). Oddly and annoyingly, they have sad and shitty tech so expect an awful and hard to use website for your banking/accounts payable.
Financial Controls: Get an external controller to handle your books, find an auditor, start with Quickbooksunless you expect fast growth, have a complex corporate structure or plan to IPO in the near term. If so, invest in more sophisticated/costly systems.
409a Valuations: You need to pay for this before you can issue shares to employees and they need to be updated if your company has major milestones/value increases (notable firms are DCF and Solium)
Budgets: Make an annual budget – get your external controller to help with structure, review with your board and get their approval in Dec/January. Formality matters for audit. Forecasts for 3-5 years in the future.
Financial Controls: Always have at least a second approval for any money going out (e.g. transfers, expenses, payroll). You’ll thank me come Audit season.
Expenses: Just use Concur, track them all.
Upslide: Worth it for anyone like a finance person who needs to connect work from Excel to PPT/Word.
Want more details? Tweet us at @podcastnotes or comment below. Thank you!