While there are many takeaways from building a company from zero to several hundred people over the course of a decade, these ten lessons learned may be the most important.
1.Just get started, have a bias toward action, and don’t get stuck in analysis paralysis.
2.Build a product that works and is so easy to use it doesn’t require customer service.
3.To grow your sales, it is critical to calculate the lifetime value of an average customer, calculate what you’re currently paying to acquire an average customer (total monthly ad spend divided by customers acquired in that month), determine the maximum you’re willing to pay to acquire an average customer, and scale your marketing scientifically by testing relentlessly and finding the channels in which you can acquire customers for less than your maximum acceptable customer acquisition cost and then growing spend within those channels.
4.Never raise more equity capital than one times your current annualized revenue (monthly revenue times twelve). If you raise too much money too soon you’ll give up too much ownership and control of your company and be tempted to spend the money in ways that aren’t carefully controlled. Wait to raise a large round until you have proven mathematically that a certain amount of additional spending with generate a determined amount of additional revenue. (Once you figure out number three this is easy). If you do choose to raise money, raise it from investors you like and get along with well. You’ll have to hang out with these people for the next three to seven years, so make sure you enjoy spending time with them.
5.After the first year or two, your success is determined by the people you hire, not by you. Stop trying to do everything yourself. Scale yourself by hiring people more experienced than you in their field as soon as you can afford to.
6.Every member of the team should have a significant portion of their compensation based on the company’s success and their department’s success – quantified and communicated clearly in advance.
7.Your job as CEO is not to micromanage or tell your team members what to do, but rather to hire experienced people who can do their jobs better than you could, collaboratively set numerical goals, and hold your direct reports accountable for their performance individually and as a team.
8.Once you get past the start-up phase when you’re responsible for everything, the six parts of a CEO’s role are to 1. Set strategy and vision 2. Manage the senior team 3. Communicate with stakeholders 4. Be the Customer Advocate 5. Oversee resource allocation and 6. Build the Culture.
9.It is possible to become more socially and environmentally responsible and increase your financial returns at the same time
10.If you create a great culture (a fun work environment filled with people who are high performers and who care about their work and their impact on the world) you will be able to attract and retain better people who will be much more engaged and productive and create a much more financially successful company.
Main photo: Unplash annie/Spratt
*This article was originally published on October 17th, 2018 and updated on December 11th, 2018.