Running a startup is hard! Running a startup as a young first-time founder is even harder. When I started this journey, I had nothing going for me other than unwarranted belief in an idea/vision. My imposter syndrome drove me to research and learn a lot about how other startups operate. Most of these lessons ended up as experiments in the teams I led and gradually over time I could separate the noise from the real operational tactics. I learned a lot from public domain, and this manuscript is a way of contributing back to it. Hopefully someone else in the same position as I was can gain a thing or two about how to build frameworks for startup operations even as a first-time founder. Below are my encoded equations for startup success based on my learnings and personal experiences:
Equation 1: Keep teams small and define a customer for every team
I stole this from Posthog’s company handbook1 and it works like magic. Here are the core sub-principles on team building:
Every team has a customer: It is much easier to optimise a team’s efficiency by anchoring their objectives and function to a single customer. This customer could be internal (another business team) or external (end users). By doing this, every quarterly objective and every responsibility of individuals in the team is modelled to achieve the core customer jobs.
Keep your teams small: a team of one person has no layer of accountability or diversity of talent – here only the extremely talented and motivated individuals win; teams above 7 members are prone to deadweight and communication/collaboration cost – for every member you add to a team, the ease of efficient collaboration (the cost) reduces, at some point this cost supersedes the value added by the extra team member making the addition negative to the end objective – example is anchored on the quote “what one developer can build in three weeks, 5 developers can build in 3 months, 50 developers can build in 3 years”. The ideal team size is somewhere between 2 and 7 (this can stretch based on what the team does) where you optimise for diversity of talent while keeping the cost of collaboration/communication somewhat low.
Equation 2: High-performing teams are anchored on simple and clear KPIs
Your business, every team, and every individual should be anchored one key performance indicator (KPI). This KPI should be tied directly to the customer job of your business, main objective of the team, and core responsibility of an individual. Note that KPIs will influence behaviour and make sure that you are always exploring how well that KPIs influence positive behaviour and is anchored to your main objective. Here are the core sub-principles on KPIs:
Avoid Vanity Metrics: The quality of the metric matters a lot and worst thing you can do is to create a metric that is in no way tied to the core customer job. To achieve this you need to define a customer – with the expectation – for not only your business but every team and individual as per equation 1.
Add Key Risk Indicators (KRI): Whenever possible you should peg a KPI to a KRI, this gives the KPI balance check to avoid its exploitation. Example: in a bank fraud detection team, detecting 100% of fraudulent transactions is the goal. However, to achieve this the team can simply flag all transactions as fraud and give the compliance team more tickets to follow-up on (not practical at scale). For efficiency, we maintain the percentage of fraud detected as the KPI, but we make the number of flagged transactions the KRI. Therefore the team has to detect the highest percentage of fraud without having to send 1 million transactions per day. This principle extends gracefully to most other teams. In marketing, the leads collected could be the KPI but the marketing spend the KRI; in product teams, the number of features shipped could be the KPI but the usage of these features the KRI.
Direct vs indirect KPIs: Most business KPIs exist in a funnel, example in marketing the core goal is to collect leads for the sales team, but to collect these leads we need to build awareness, from which we get some engagement (consideration), from which we’ll trigger lead collection (conversion). While the core team cares about the leads most of the tangible work is done on generating awareness direct KPI) and gradually choosing awareness sources/actions where reached audience is more likely to convert2. In such a funnel, creating the awareness campaign is a direct KPI (the individual has full influence over the number campaigns launched) but lead conversion is the indirect KPI (there’s a lot of factors that influence whether the lead is collected or not and are not fully tied to the individual). You should reward based on the indirect KPI (your core goal), punish based on the direct KPI (non-negotiables), and base your strategy meetings on how the direct KPI can better improve the indirect KPI.
Equation 3: Speed of execution matters more than the decision itself
Equation 4: Systemise everything, document everything, and iterate
Equation 5: The hardest problems inspire the most extraordinary talent
Equation 6: The best ideas come from the least expected sources, decentralise and incentivise innovation
Equation 7: The toughest competitors are those that keep innovating and move fast, not those that have more money or higher valuations
Note: I am gradually updating these principles as I keep learning and unlearning. I am also gradually fleshing out the equations without deeper insights.
