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During the sprint of a Y-Combinator batch (or any other accelerator) it’s easy to see demo day as the finish line. Of course it’s much closer to a graduation, except you and your batch mates are giving dozens of “up and to the right” mini commencements in the form of a 2-minute slide presentations.
And just like a graduation, there’s no clear path to success at the next level. However, based on our experience at SendHub after our graduation from Y-Combinator in March 2012, here are a few suggestions for starting (and succeeding at) the next phase of your company.
Raise money. Right now.
When it comes to raising your seed round, strike while the iron is hot. Demo day, and the days immediately following, are the best time to raise money. Some investors have specific allocations for each accelerator and the longer you wait to follow up, the more likely another company has taken your place. Even if your potential investors don’t do allocations, demo days create competition and excitement amongst the captive audience of investors. So from the moment demo day starts to the day you close the round, you’ll want to follow up on every lead as fast as possible.
On our demo day we had just eight investors express interest in us using YC’s online voting system. Some of our batch mates had upwards of 50. We were a simple app, in an unsexy space but we still desperately needed investment to keep going. We had no choice but to work the floor for the whole of demo day collecting business cards. We followed up with most investors that day and had our first meeting scheduled for 9 a.m. the next day. The strategy proved effective. Although investors were clearly unimpressed with our two minutes onstage, they bought into the team in follow up meetings and we got commitments early.
Each time we got a commitment we got the docs signed and the money wired ASAP. Not doing this is a mistake that can cost you their investment. Once closed, and absolutely not before, we asked our newest investor for access to their network of investors. At the same time, we let any investor who was still on the fence, know that we had a successfully closed another investor. In the end we communicated with over 100 potential investors in the two weeks following demo day. We got about 65 refusals and 35 commitments, which was enough to raise $2 million and go back to work almost immediately.
Hiring is a process. It increases your work in the short term.
Having been intimately acquainted with long-term sleep deprivation, I expect you’ll be keen to bring on new blood. Unfortunately, hiring significantly increases your workload in the short term. We’ve had zero success with external recruiters, but were most successful hiring through our personal networks and posting on the job boards of relevant sites. Personal networks work the best. Realizing the value of your team’s personal network usually requires offering financial rewards for hires, and I would suggest making those rewards very attractive.
Brining on new employees requires preparation before they arrive, a smooth process for getting them to their first success quickly and then into their first real project. Do not underestimate this. Your new team member is taking a big risk joining your company, so show them early why they made the right decision. For at least the first few weeks you can expect to spend a lot of time training a new employee into the role, while making sure all the work for that role gets done too. This is where the workload increase really kicks in, but digging in during these early days sets a great example.
Interviews, coding challenges and references are all good indicators of whether a potential employee might be a good fit, but nothing is a substitute for them actually being on the team and producing. At SendHub we have a probationary period we’re upfront about with every candidate receiving an offer. If it’s not going to work out, close the relationship as soon as you can.
This is better for the company and also the employee, if they’ve only been with you for a few weeks there’s no need to put it on their résumé and have to explain what happened. At SendHub we’ve let go of about half of the people we’ve hired, most of them within a few weeks of their start date. Looking back at everyone we let go much later, we should’ve terminated them during their probation.
Focus and take time to plan
As your team grows, planning becomes more important. I always spend a few minutes each morning planning my day. Ideally it’s a list of 2 or 3 tasks I want complete that day. It’s tough to be realistic, but being disciplined about this simple list has helped me become more productive, primarily because if I believe the list is realistic, then I’m more motivated to complete it before I sleep.
This strategy also works well with team members: each week at SendHub, teams commit to completing one or two realistic “headlines” per person. Headlines are the key tasks for the week and require at least one day of work. These goals are announced to the company every Monday morning. We’ve found employees have come to measure their own performance through these headlines and there’s a high correlation between regularly completing your headlines and being voted the weekly MVP.
Just as setting short-term goals are helpful for getting small units of work completed, setting longer term goals for the company is great for tracking overall progress and creating a team wide sense of urgency. At the start of each month, and quarter, we set goals for both our key metrics and also releases.
The goals are created with a lot of team involvement, so everyone is on board and we review the goals at the start/end of each time period. The review is critical as it forces you to be transparent about how the company is doing, based on what you previously defined as success. I hate standing up in front of everyone and saying we failed at something, so avoiding that is a powerful motivator. You can pass this onto other team members by giving them ownership over specific goals.
Graduate with pride
Very few people have the opportunity to start a company and fewer still will get their company off the ground. Although this is the start of the journey, accelerator graduates have already made it much further than most. But remember, getting a Series A (if that’s the next step) and setting up the company and its culture are orders of magnitude more difficult, so take the necessary steps and make sure they count.
Ash Rust is one of the co-founders of SendHub. He studied Computer Science at Exeter College, Oxford.