I've worked at a couple of Series A-funded SaaS startups. Of course, you may think that it is just a fundraising stage in the startup lifecycle. What's the big deal about it? The truth is Series A is unique. It brings along a sudden change in the way the startup operates. As a company, you've been frugal to date even when you'd raised a pretty decent seed round(s). You were probably chasing customers, developing the product, figuring out GTM, hiring, retaining talent and customers. Managing things on a budget, obsessed with user growth, retention, and whatnot.
Somewhere around this time, your product achieves PMF. There's some evidence in customer cohorts that shows early signs of fitment. There's churn but unalarming. On the sunny side, there's retention, usage, and stickiness. You show these numbers to VCs, and one (or a few) of them signs you a cheque. Boom! You're a Series A funded startup.
The budget constraints are now gone.
You and your leadership team are being introduced to potential customers. Doors are being opened, hands are being shaken, hiring is easier, and experienced people are now interested in joining your startup. It is happening fast. Now you see that a month, a week can bring a lot of change. That's a crazy, perplexing, mind-boggling pace of change.
With Series A fundraise, you've more money than you know what to do with.
As a result, marketing budgets shoot up, hiring is accelerated, the sales team is getting beefed up, the company is preparing to scale operations. No one knows what is happening, what's going to happen.
The CEO is looking at the team for the action plan and vice versa. Vague answers follow, and in the interest of time, random numbers are thrown in a spreadsheet giving birth to targets detached from reality. Far-fetched expectations make their way. It is not crazy yet. Crazy is getting started.
The Old-guard Vs. New guard problem: At every stage, the company needs different talents. The people who take it to 0 to $1 million in revenue are not the same who take it from 1 million to 10 million. - Frustrated CEO to all her employees during all-hands. There are two* types of people attending all hands meet. The ones who vehemently agree with the statement and the ones who find it ludicrous. The latter represents the Old Guard. These people like to do things a certain way, drop in early days' stories during meetings, and walk the office floor (now zoom calls) with impunity until the New Guard arrives. Represented by the newly joined employees, the new guard grapples with the status quo. They see broken, poorly defined processes or the lack of them. They are change agents. The new guard is pitted against the old guard. It is time to welcome and accept, chaos to the workplace. More on this later. *Meanwhile, hiding in plain sight is a third type that's observing every little event. It represents the Indifferent lot. Between New and Old guard, the startup has a chance to win when any of them wins. If the third type (indifferent ones) wins, the company invariably suffers.
Hooman Reezources: It is at this time the HR joins (not a recruiter but a Human Resource manager) The mere presence of an HR ruins your beautiful startup life. Or the idea of it. You used to come to the office at any time, leave at any time, play TT, foosball all you wanted, whenever you liked. Not anymore. Boundaries get defined. KRAs, KPIs, OKRs are introduced. They pick a fancy name for the R&R program. Consultants get paid to train you on these new frameworks, policies, acronyms get introduced. You stop associating the word POSH with clean. And it starts to feel like you exchanged freedom for a cheque from a VC. When you didn't even get the cheque yourself. Feels bruh!
Chaos is the new normal: You merely adopted chaos. I was born in it. - Series A startup employee. The goal post shifts every few weeks. One week the priority is geo expansion; the next week, it is going upmarket; the week after, it is product line expansion. The end goal is to get to 3X in the next 3 quarters and raise another round of funding at the valuation of X million USD. T2D3, anyone? Do the numbers, go home, Netflix and Chill. Just that there's no going home or Netflix, and there's definitely not any chill, not as far as you can see. It is growth at all costs. You have a target to give money to Google, Facebook, Twitter, Microsoft via ads. You're running ads on tangential keywords, an irrelevant audience in your quest for growth. Pumping up vanity metrics like traffic, signups, etc. However, the bottom funnel doesn't improve. To fix the unfixable problem, you are asked to optimize the bottom of the funnel. You set up AB tests and get more tools integrated. Yet the numbers don't improve. There's, of course, some slump in demand, holiday season, winter season, autumn, change in Google's algorithm impacting conversions. So this drags on for longer than it should. Meanwhile, the gains you would have achieved by focusing on the right audience and running campaigns just for them becomes your opportunity cost. So much for knowing what needs to be done but not doing it because you had the first world problems of abundance. Tsk Tsk.
First in, Close Up → Moves Up: You'll see inexperienced folks being handed over important positions and designations. Sometimes they are deserving. Sometimes they are not. In the latter case, proximity to the founders, loyalty are rewarded with promotions and titles. You may thus see the case of confidence masquerading inexperience or charisma masquerading incompetence. Given enough time, these cases reveal themselves. As an observer, you should look for the genuine compliments someone who's climbed the ladder quickly gets. Simple signal separation exercise.
Conventional wisdom is for traditional companies, not revolutionary startups: You may see, while recruiting, founders falling for grey hair or bald heads or wrinkles in general. They overvalue experience and undervalue context. If you're lucky, you'll see some good folks bringing and making good use of their decades of experience. If you're unlucky, you'll see corporate employees with decades of experience moving to a startup trying to solve their mid-life crisis. You know how it is. It is relatively easy to observe the fitment in the first few months of their joining. The leading indicators are usually right.
This is not a nuanced take. Hence, I will end it here with a quote from a dear friend:
I have worked at three series A companies, trouble is written all over my resume (sic.) -
As always, Shaf
Originally published here.