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Editor, Camille Ricketts

Management and Company Building

A Counterintuitive System for Startup Compensation

When Molly Graham joined Facebook, the company already had 400 employees, but there was no official performance or compensation system in place. There had been attempts, but nothing stuck. The result: Very little transparency, a lot of one-off compensation decisions, frustration and confusion. Working closely with Sheryl Sandberg and HR chief Lori Goler, Graham set out to change this by going back to the basics.

“It gave us a chance to start from the beginning and say to everyone, ‘Okay, here is how salary works. Here is how equity works. Here’s how bonuses are calculated. We’re using formulas for all salary increases from now on. Here are the multipliers based on performance,’” she says. “People frequently find compensation and performance management overwhelming or bureaucratic, but we got such a positive response when we implemented this first system and explained it to the company. People were grateful. A system that was relatively simple, clearly communicated, and fair made a huge difference.”

Graham emerged on the other side realizing how valuable a solid, standardized compensation system can be. Today, as Head of Business Operations at Quip, she believes that there is a simple, scalable, transparent compensation system that will work for almost all startups. Here, she shares some of her golden rules for compensation and the system that she thinks strikes the fine balance between a startup’s needs and keeping employees happy.

Management and Company Building

This is Why People Leave Your Company

When Carly Guthrie was running HR for Per Se, one of the hottest restaurants in New York, the General Manager gave her a piece of advice: “You know, Carly,” he said. “If we’re doing our job as leaders, a performance review should only be two columns: Column A is what you do great and Column B is what you do not-so-great. Now, here’s how we move things from Column B to Column A.”

This approach stuck with Guthrie as she left the restaurant world to head up people operations for tech companies. It shocked her that these types of candid conversations were hardly ever happening, and people left as a result. “There’s a mercenary mentality in tech right now — an idea that there’s always going to be something hotter, faster, more groundbreaking,” she says. “And yet, there’s very little internal discussion about how to keep people.”

Guthrie has been watching employees take and leave jobs for over 15 years. Turns out, the reasons people love and hate their work are largely the same across sectors. Step one to retention: Understanding why and how it fails. In this exclusive interview, Guthrie shares what she’s learned about why people quit, and what startups can do after an employee’s first day to make sure they stay happy, engaged in their work, and committed to your company (and to deleting every email they are most certainly receiving from recruiters).

Product and Engineering

When It Comes to Market Leadership, Be the Gorilla

Andy Rachleff is Executive Chairman of Wealthfront, an automated investment service. Prior to Wealthfront, Rachleff co-founded and was general partner of Benchmark Capital. He also teaches courses on technology entrepreneurship at Stanford Graduate School of Business. Follow him on Twitter @arachleff.

In their outstanding book, The Discipline of Market Leaders, Michael Treacy and Fred Wiersema argue the only way to achieve market leadership is through a singular focus on one of three strategies: Product leadership, cost leadership or customer intimacy leadership. The most common of the three strategies pursued by technology companies is product leadership. Here's how you can achieve it, and why you need it to win big.

Management and Company Building

What Eventbrite Did Early to Create ‘Sustainable’ Success

By early 2009, Eventbrite had been turned down by practically every venture capital firm in Silicon Valley. The economic downturn had taken its toll, and Co-founders Julia and Kevin Hartz and Renaud Visage had a choice. They could give up, or they could continue to bootstrap and grind as the only three employees — like they already had for the previous two years on less than $250,000.

Ultimately, they chose to stick it out. And while things have turned around, and the company has seen explosive growth, the founding team came out the other side with a battle-tested commitment to efficiency, a healthy sense of paranoia, and a plan to turn their competitive advantages into sustainable advantages.

Recently at Stanford’s Entreprneurship Corner, the Hartzes shared what they learned from this experience, the qualities they believe enduring startups must have, and how founders should capitalize on their early days to secure long-term success.

Management and Company Building

Win the War for Great Global Talent — Keys to International Recruiting

Megan Zengerle had a problem. For months, her company had been courting a hire from Brazil. They loved him. He loved them. Her team had filled out all of the paperwork and submitted them to the H-1B pool as planned, but they missed the April cutoff by a number of hours. If they still wanted the hire, they’d have to wait an entire year to apply again — meaning he wouldn’t actually start until the following October.

No startup can afford this kind of wait. They don’t know where they’ll have headcount in six months, much less in over a year. Fortunately for Zengerle, her company’s immigration attorney had an idea: Apply for a J visa to cover the 18-month wait for an H-1B, and get the employee onsite immediately. The team sprinted to file the right papers, and the plan worked.

Moral of the story: Competence in international hiring can be a major competitive advantage for entrepreneurs fighting for the best talent out there, allowing them to tap into less competitive markets and go the extra mile for that perfect hire. If you don’t know your stuff (or employ someone who does) you’re sure to be outgunned. In this exclusive interview, recruiting veteran Zengerle, now VP of People Operations at online education company CreativeLive, lays out what founders need to know, expect and do to get the world’s best in the door.

Management and Company Building

Find the Best Lawyer for Your Startup with This Off-the-Record Advice

Early last month, Snapchat founders Evan Spiegel and Bobby Murphy successfully made their third, alleged co-founder Reggie Brown disappear — with an undisclosed settlement after a prolonged legal battle. News of the decision rippled through the valley, recalling past disputes between Mark Zuckerberg and the Winklevoss twins, and Zuckerberg (again) with cut-out co-founder Eduardo Saverin. Tech lawsuits seem to have reached starpower status, but there’s surprisingly little advice out there on how startups should work with their lawyers on a regular basis, before crisis strikes.

This is Ken Callander’s wheelhouse. As the managing principal at Value Strategies, and a marketing veteran from leading business law firm Davis Wright Tremaine (and Agilent and HP before that), he now works closely with startups to help them not only find the right lawyers, but get the most value from those relationships at every stage. In this exclusive interview, he shares some of the tips and tricks he’s discovered over the years to help founders get smart about managing their legal spend.

Management and Company Building

Here’s Why Founders Should Care about Happiness

Scott Crabtree spent 24 years climbing the ladder in the gaming and software industries, eventually leading his own engineering team at Intel. And after observing life at companies big and small, he recognized one commonality: The happiest people are the most productive. The difference was so striking to him that he retired and rebooted his career, founding Happy Brain Science to surface and share the scientific underpinnings of what makes people happy and how that makes them more effective at their jobs and in their lives.

“Happier people are more successful, more creative, energetic, resilient,” says Crabtree. “They work better together. They absorb more information. They have more tools in their tool belt to help them handle whatever life throws them. They are healthier, they live longer — and they show up at work more often.”

There’s a common assumption, he says, that you will be happy when you are successful. But the reverse is actually true, and not just anecdotally. Hard neurological science supports the idea that happy people have more capacity to succeed. And beyond that, that happiness is not a genetic mandate, or a product of circumstance. It’s a choice. Here, Crabtree boils this choice down into three opportunities for change that can make people happier. As an employee, a manager, and a founder, these opportunities are also the building blocks of high performance.


How SendGrid Built Its Developer Evangelist Strategy to Reach Critical Mass

This piece originally appeared on CMX.

Over the last five years, email management and delivery service SendGrid has grown from a Techstars startup to a company of over 230 employees with steadily increasing revenue. During that time, their community team has transformed from one MBA grad running the show to 14 specialized developer evangelists and community managers, accounting for 6% of the overall SendGrid team.

SendGrid’s product is aimed at developers who need to send mission-critical emails. It’s incredibly important and lucrative stuff. The company now provides email infrastructure and delivery solutions for companies like Pinterest, Snapchat, Airbnb, and Uber, and has sent out as many emails as McDonald’s has sold hamburgers.

What does community look like at a company like this? Can’t you just build an awesome product and then market it to developers and startups? It turns out, no. Not at all. Not even a little bit.

Tim Falls, SendGrid’s sixth hire, had been there from the start. He only just left this month to become Vice President of Community at Keen IO. In this article, he charts SendGrid’s path to a vibrant community, and how that helped build a mature business.

Management and Company Building

WhatsApp Used This Pricing Strategy to Win and You Can Too

Seven years ago, First Round Partner Josh Kopelman wrote a seminal blog post on the importance of free services in consumer-facing business models. He argued that most entrepreneurs misunderstand how subscription pricing works and assume that as price goes down demand goes up in equal measure. Instead, he suggested that price affects demand to a point, but the relationship is far from linear — there is a gap between free and any other price. This gap is known as “The Penny Gap.”

Years after the post was written, WhatsApp used a novel approach to solving the Penny Gap while creating one of the fastest growing mobile networks on the planet. And while WhatsApp built an incredible product that solved a real need, their understanding of the Penny Gap may have been their shrewdest product move of all. In this article, we explain why, and how this knowledge can help your company and apps succeed.

Management and Company Building

7 Tactics to Get the Most Out of Your Startup's Advisors

It happens all the time. A founder surrounds him or herself with a skilled group of advisors — maybe one or two from investors, a trusted mentor from their past, perhaps someone influential who can open doors. But as the company grows and pivots, it becomes clear this is not the best team to create long-term value. Can this situation be avoided by choosing advisors more wisely? Can it be turned around once things aren't great? 

As a partner at First Round, Phin Barnes has advised more than 20 startups and has seen a common problem emerge: Advisors (especially investors) default to removing roadblocks for the companies they support — everything from finding them new hires to good lawyers — but spend very little time offering strategic, tactical advice that could make an even bigger difference.

In this exclusive interview, Barnes contends that it doesn’t have to be this way. Founders can ensure that they don’t miss the opportunity presented by their advisors — they can deepen these relationships, use them to maximize their knowledge in certain areas, and drive more productivity. The following seven tactics can help.


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