If you’ve been an operator in the SaaS industry for a long time, you’ve probably considered starting your own company. What does it take to become a founder, and how does it differ from operations? In a recent week’s Workshop Wednesday, held every Wednesday at 10 a.m. PST, Jeff Yoshimura shares his five major themes every first-time founder should consider and his lessons learned.
Jeff is the co-founder of a new stealth startup, a previous CMO at Snyk, and an operator at Elastic, Zuora, and Salesforce. His day-to-day role as a first-time founder involves a lot of work around creating and building the MVP product and filtering out all of the noise in this SaaS ecosystem.
Now, Jeff shares five themes and his lessons learned over the past 6-8 months as a founder vs. an operator.
#1: Capital
As an operator, your job is to take money and add headcount and programs to drive the growth engine for your company, You might think of capital as fundraising and budget. At hypergrowth companies raising a lot of VC money, you contemplate how to do things in a capital-efficient way, but there’s always a need for more — more pipeline, more tools, etc.
This has changed 100% as a founder.
Lessons for a first-time founder: Less is better. You want to be scrappy and figure out how to do as much as possible without deploying the capital you’ve raised and preserving that money to build a product.
As a pre-seed, pre-institutional funding founder, your focus is to build a product first and get a beta working that can be deployed prior to going out and raising funds. If you can do that, it’s a better approach than having an idea, raising and spending money, and then having to pivot.
But building a product isn’t the only thing your energy is focused on. You also want to build a great place to work, not just for founders but for employees and future employees. You want to ensure everyone can participate and share in creating a valuable company over time.
#2: Product
As an operator, you’re given a playbook. Whether you’re joining at Series A, B, C, pre-public, or post-public, you have to figure out how to scale the operations of getting your product to market and in the hands of as many customers as possible and then making those customers successful.
As an operator, it’s less about the why and more about the how you do it.
As a founder, you have to know the why — why do we exist? Why are we the best people to go out and solve this problem? What problem are we trying to solve?
Lessons for a first-time founder: You have to get into the mindset of your customers and who will care about what you’re doing. That then filters down into what you need to build and the early beta design partners to go after. From there, it’s a constant pivot, adjustment, and iteration. When you’re building something, you don’t have the same scale as someone who’s reached product maturity or product market fit. As a founder, you have to discover the how of execution by understanding the why, too.
#3: Culture
Jeff has joined successful companies pretty early on. As one of the first ten employees, you become part of building up a culture. What he realized was different as an operator is you come into a company and embrace the culture. You live the culture as you hire and scale the company.
Lessons for a first-time founder: Your words matter on paper, in a Slack channel, and in every conversation you have with your team. You have to define a culture, which isn’t always set in the early days, and align with co-founders to create something unique.
As founders, you own and live that culture while also building in flexibility because things may change. Figure out your core bedrock of culture that will persist as the company goes through ups and downs.
#4: Hiring
As an operator, a lot of people help you hire. Finance partners set budget and work with you to identify requisitions around the people you hire. You have people partners and recruiting partners. As an operator, you’re mostly thinking about your need for your function in isolation — what you need to achieve the goal or metrics assigned to your team.
You hire in advance, and you’re constantly looking for the right people and talent to help scale the business.
Lessons for a first-time founder: As a founder, you focus on the company’s first ten employees and what makes them special. What are the must haves? Most founders agree that those first ten hires are most likely in product and engineering because you have to build the product first. As founders and cofounders, go through the thought exercise of identifying the best must-have first ten employees to hire into the company.
#5: Operating
As an operator, you’re in somewhat of a rat race — weekly KPIs, monthly reporting, offsites, management meetings, functional team meetings, etc. A lot of this work is driven top-down because, at the end of the day, when you’re operating at scale, everything is top-down. You look at data that says you need more pipeline, and you go address the issue.
Lessons for a first-time founder: Your day won’t be completely filled with meetings, so being able to find work and facilitate that work with your first ten employees should be in your DNA. This kind of collaboration is important to build an early culture of operating. It allows you to become an elite team of over-achievers. Everyone matters.
As an early founder team, everyone needs to be a line above the over-achievers because you have limited resources, budget, and time, and they all need to be elite.
A Framework to Determine if You’re Ready to Become a Founder
If you’re thinking about becoming a founder, Jeff shares the things he’s considered in the past six months as he joined this movement.
Right Timing
It has to be the right time. We all have families and children, and it’s essential to consider the time requirements and life experience you have before taking the dive. It’s a journey over the next ten years, not a short-term hit.
Right Pain
You have to be in a position to either see or have lived the pain you’re trying to solve for. What makes you the right person to solve that pain?
Right Market
Jeff loves joining companies during a downturn because a lot of innovation and creativity comes from it. Keep a pulse of the market to determine if it’s ready for what you’re offering.
Right Team
You need the right amount of people around you who are up for this journey or have gone through it before. Jeff joined two people who had done awesome things in their careers, and he had a lot of respect for them.
Right Network
As you live and work in this world, you build a network, and hopefully, that network helps you evolve, grow, and learn from their mistakes, successes, and experiences.
Last but not least, don’t forget to have fun. We live in a distributed world, and you’re not in the office every day, but you can still have fun virtually. As a founder, it’s about a one-team concept of alignment that will help you achieve long-term success.
