Back in 2006, I launched my first startup: a CRM for mortgage companies with $230K in funding from three of my former bosses. We ran face first into the financial crisis and I missed payroll in 2008. Twice.
My face still burns when I remember the shame I felt calling up my investors to ask for an emergency wire, then paying my employees’ overdraft fees because their rent checks had bounced. By the time we got an acquisition offer four years in, I would have sold for half the price just to be free of it.
When we started Interviewed nine years later, that scarcity mindset stuck. In fact, we enshrined it in two of our guiding principles:
#1: Don’t hire until we’re bleeding
#5: Budget to only use half our money
We didn’t need to run on a shoestring: we’d raised a respectable $2.4M seed round coming out of YC in 2015. But our explicit goal was to run so frugally that we’d never have to raise another round.
After two and half years, we still had a big chunk left in the bank and were modestly profitable. I remember humble-bragging this fact to another founder at a party and felt insulted when he shot back:
“You’re doing it wrong.”
I riposted with something eloquent like, “nuh uh” and walked away… the fuck did he know, anyway. Shortly thereafter, Interviewed got acquired by Indeed and I felt vindicated.
Three years have passed, I’ve left Indeed to launch Steadily, and I’ll concede.
I was doing it wrong.
What was disingenuous about Interviewed was that I dreamed of putting a dent in the universe, I sold the vision that we would, and I had every opportunity to try. But I wasn’t willing to shoulder the risk of outright failure.
Budget to only use half our money.
Don’t hire until we’re bleeding.
Lower the variance.
I appreciate that many companies can’t or shouldn’t shoot for the moon. My first company certainly couldn’t; Interviewed could’ve.
These moments keep happening at Steadily where I think, “At Interviewed I would’ve done the opposite.”
We sourced three exceptional candidates last month. Competitors thought they were exceptional, too… they’re expensive as hell. So we offered top of market and signed them.
We’ve been renting an office month-month for $900. It’s a windowless box with no rooms to take calls and no kitchen, but it’s cheap. Datha, my cofounder, befriended the tenants next door and they offered to sublet us their space that’s 4x bigger, has two rooms with doors, and a kitchen for $2,500. At Interviewed I would have voted no… that’s $19K a year in extra burn. At Steadily, I voted yes… it’s a great deal; we’ll need it.
None of this is free, of course — our burn rate means that we will be obligated to raise more capital in a year or so.
The reason my mindset is different this time around is that the goal post moved.
At Interviewed, my definition of success was reaching a non-zero outcome: just don’t die. So, the conservative path was rational: lower the variance.
At Steadily, success means building a great, enduring company. Charting an aggressive course maximizes the probability of reaching that goal.
I decamped from SF to Austin three years ago and that means fewer candidates I interview have startup exposure, so I give them all the same primer:
- We’re a venture-backed startup.
- That means we’ve made a Faustian bargain: If we triple in value every 18 months, we can sell 20% of the company each cycle in return for the capital to get to the next milestone.
- We pay top of market to attract and retain exceptional talent.
- We work our asses off.
- We’re going to put a dent in the universe or die trying.
- High variance.
- You’re gonna love it.
Don’t get me wrong, Steadily has a decidedly no-frills aesthetic. But I’m no longer frugal if it can propel growth. The question that keeps me up at night is no longer, “How to not die?”