Today was an exciting day for ProRata (an Atlanta software startup focused on simplifying revenue recognition in QuickBooks) because employee #1 showed up this morning on his first day at ProRata bright-eyed and excited about the opportunity that lies ahead. The first employee is one of the most unique hires for any startup, and the combination of traits needed requires a multi-talented candidate that can adapt to any role quickly.
Employee #1 should be able to do the following:
- Relentless ability to prospect new customers.
- Persistent follow up with leads and prospects.
- Learn to perform a product demo (but the founder(s) should try to do the first 500 demos).
- Ability to implement new customers.
- Manage existing customer accounts.
- Recruit new employees.
- Attend trade shows.
- Discuss product enhancements needed to help achieve product/market fit.
These are just some of the many traits to look for when hiring the 1st employee. In a very early stage startup, both the employee and the employer are taking a risk on each other, but the startup can reduce their risk by looking for candidates that exhibit the above self-starter traits with the ability to take on multiple responsibilities.
What are some other characteristics/traits startups should look for when hiring employees at an early stage?
A personal goal of mine is to be the seed investor & advisor in at least one new startup per year. In 2014 it was TapCue, a healthcare communications platform, and in 2015 it was ProRata, a fintech application to simplify deferred revenue recognition in QuickBooks for subscription based businesses.
Here are a few ideas or areas of interest for a 2016 investment:
- An application focused solely on helping brand new college grads find their 1st career opportunity. At QGenda we physically attend 30+ career affairs per year ranging from as far north as Wisconsin all the way down to Florida, but imagine if we could look at candidates from 300+ schools! Existing similar idea: AfterCollege.com
- An all in one HR application for companies with 1 to 300 employees. This application would offer automated employee on-boarding, payroll, time off tracking, employee benefits administration, employee review tracking, and several other HR specific tasks that need autopilot. Existing similar idea: Namely.com
- Proximity based mobile app to easily provide a financial tip without using physical cash. For example, a valet driver would use the app in tip receiving mode, and the car owner would simply provide a tip by selecting the valet driver from a list of near by tip receivers.
Coming up with the idea for a new startup is the easy part, but finding the right co-founders to embark on the 8-10 year journey is the hard part.
The first day of the new year is a perfect time to reflect on the prior year’s accomplishments and start focusing on goals for the new year. While continuing to remain self funded at QGenda, the 2015 year turned out to be our best ever.
Here is a quick look back at QGenda’s 2015:
- 998 fully qualified product demos performed
- 379 new customers from the 998 demos
- Added $5,009,294 of new customer annual recurring revenue
- Grew from 48 employees to 100 employees
- Low customer churn with 97% customer retention
- Added Time & Attendance and a few other major product enhancements to our core scheduling platform.
The QGenda 2016 look forward:
- Add $10,800,000 of new customer annual recurring revenue
- Have 100,000+ healthcare providers scheduled by QGenda
- Grow from 100 employees to 160 employees
- Expand from 18k to 30k sq ft of office space in Atlanta
- Open a west coast office in the San Francisco Bay Area
- Increase QGenda’s Average Revenue Per Account (ARPA) by offering customers additional products and services to go along with their existing QGenda workforce management platform.
I feel blessed to be part of such an amazing company, and am truly grateful to be surrounded by the best employees and the greatest customers!
Last week I had the pleasure of talking with a fellow entrepreneur who is in the customer discovery phase of his new business idea. His idea centers around helping companies scale successfully that are in the growth stage with 25-75 employees. During our customer discovery interview together, he asked “as the CEO of a company experiencing high growth, what are the top 4 priorities you find yourself working on each day?”
Here are the top 4 priorities I mentioned in my answer:
Hiring and retaining the best talent to join the QGenda team. We have done a great job at hiring the brightest minds from all over the country to join our team, and we are lucky to have an amazing company culture. Please join us: QGenda.com/careers
Customer retention and providing the best product support is another high priority and a huge differentiator when it comes to our competition. We definitely take pride in over delivering to all customers. A customer in distress is a natural part of any business, and luckily it is a rare occurrence at QGenda, but when this happens we take an all hands on deck approach in that everyone at the company steps up to help in any way possible.
Product vision and continual innovation of new features is something I constantly think about. In order to stay in touch with our customer’s pain points and drive the product vision, I travel at least twice a month with the implementation team and help train end users without them knowing I am the CEO. Seeing exactly how customers use the product and talking with them at length provides for a great starting point to developing new features.
Learning from mentors and other entrepreneurs is important because they have most likely been in your similar position before, and their advice will save you time, money, and prevent you from making any mistakes they might have made along their journey. I am a huge fan of asking entrepreneur mentors lots of questions, and I have found that entrepreneurs really like helping other entrepreneurs, so always ask for advice when you making big decisions!
The top 4 priorities of a founder/CEO will always vary based on the current stage of their company. The top 4 priorities I dedicated time to today as a growth stage company are very different than they were in 2006 when I set out to build QGenda. What are the top 4 work related priorities you dedicate time to?
The Atlanta technology startup scene has really blossomed over the last few years with further investment and development of environments like the Advanced Technology Development Center (ATDC), Atlanta Tech Village (ATV), and the Hypepotamus. Many Atlanta startups (such as DocTime) are attracting the best local talent from GA Tech, but what does Atlanta need in order to attract great talent from other amazing schools throughout the country? One idea is to combine some the best attributes of the ATDC, ATV, Hype, and Y Combinator into an exclusive Tech Tropolis incubator.
Here are some of the ideas for the Tech Tropolis:
- Stand alone 6 to 8 story building in West Midtown Atlanta
- Exclusive and competitive application process w/ acceptance of only a handful of startups each year where the founders must have a technical background
- Top 2 to 3 floors would be free furnished apartments for founders
- Bottom floors would be dedicated to free office space for founders
- Free catered lunch & dinner Sunday through Thursday so founders can soley focus on building their business
- Expectation to live and work in the Tech Tropolis for 1 full year
- $75,000 initial investment from the Tech Tropolis in exchange for a small percentage of equity
- Monthly outings such as laser tag, whirly ball, habitat for humanity, braves or falcons game, etc…
When starting a company some of the most time consuming and biggest challenges are office space, living space, having enough money, remembering to eat after hours of heads down coding, and the list could go on and on. The idea of the Tech Tropolis is to help completely eliminate all of those distractions and give founders a pure complete environment to thrive as entrepreneurs with the least amount of worry.
What else is Atlanta missing to attract the best talent from across the country? What else should the Tech Tropolis include for founders?
Back in January after finishing up an amazing 2012, we decided to add fuel to the fire at QGenda by investing heavily into creating a repeatable sales process. In 2012 with only a few sales team members, we performed around 250 product demonstrations with a 41% close ratio yielding us 104 new customers without having a true sales process in place.
Since January we have grown the sales team at QGenda from a 2 people to currently having 14 rock-stars filling the roles of VP of Sales, Director of Sales, Account Executives, and Business Development Reps. We are excited about QGenda’s move into a new larger office in Atlanta’s Buckhead Tech Corridor where we plan on doubling the size of our sales team over the next year.
Here are some staggering growth metrics after just 6 months of sales efforts:
- 399 demos performed
- 28% closing ratio with 110 new customers
- 1800+ prospect touches (emails/cold-calls) per week
- 2.2% of prospect touches schedule a product demo
It’s an exciting time to be part of the QGenda sales team, and as we go through the rest of the year gathering more metrics about our sales team machine we will continue to tweak & refine the repeatable sales process.
What other sales metrics are important for a SaaS company to track throughout the year?
Hiring new innovative rock-star talent with a self-starter personality is something we constantly think about every day at QGenda in order to provide the best customer experience during high growth. Although now with 30+ employees I’m a bit removed from the hiring process, but it was not that long ago when I personally interviewed each and every candidate along the way.
Here are some hiring tips we use at QGenda:
- Attract candidates by asking fellow employees to recommend people they know, attend college career fairs, and post job listings on linkedin.
- After casting a wide net and gathering hundreds of resumes, filter them down by looking for certain key indicators about their technology prowess. For example, are they using a modern tech savvy email interface like GMail or are they still sporting a comcast or bellsouth email address.
- Once the candidate passes the key indicator filter, a quick 10 to 15 minute phone interview can tell you a lot about a person. We like to break the ice with one of the most important questions during a phone interview by asking “Tell us something/anything about yourself that is NOT on your resume.”
- If the candidate passes the phone interview, the next step is to bring them in for an in-person interview where they will take a tour of the office, meet as many existing employees as possible for a corporate culture fit, take a written test with subjective & logic portions, and lastly work with 3 others to solve logic problems on a white-board.
The process above ultimately helps us hire candidates that are motivated to do whatever it takes to succeed, make unequivocal eye contact, and speak logically with conviction. Hiring new employees is one of the most exciting parts about growing a business and is far from a science, but using some basic guidelines can help streamline the process.
What are some other key indicators or guidelines you use when hiring new employees?
We recently signed a 10,000 sq ft lease with a pre-negotiated expansion option of 6,000 additional feet and look forward to relocating the QGenda headquarters to the 11th floor of Tower Place 100 in the Buckhead Tech Corridor. At QGenda, due to our rapid growth, we have consistently outgrown office space over the years, and today we have 30+ employees spread across multiple floors for a total of around 4500 sq feet.
Here are some key factors to consider when looking for an office space:
- Parking space allotment is always a ratio in the form of X # of spaces per 1,000 sq feet. You want to make sure you always get a minimum of 4 per 1,000. During our search there was a penthouse office space we really liked, but the ratio was 2.6 per 1,000 so we had to eliminate it from consideration.
- Negotiate free rent inside the term of your lease. Most landlords will try to give you free rent outside the term of your lease by saying it’s a 5 year term with 10 months free rent making it a total of 70 months. It is much more preferred to be a 5 year deal with 10 months free inside the term of 60 months.
- Pre-negotiate adjacent expansion options before signing the lease to prevent the landlord from taking advantage of your growing needs by knowing the best space in the entire city for your business to expand into is the adjacent space right next door.
- Tenant Improvement (TI) allowance should be an average of $4 per sq ft per term year. You should have the option to use part of the TI towards moving/cabling.
- Avoid signing a personal guarantee.
- It doesn’t hurt to ask for free parking. However, if the building is well occupied it is highly unlikely you will receive a deal on parking fees, but they typically will make up for it in free rent or some other way.
- Expect an annual rent escalation of 3% each year, but have it begin in month 25.
Finding the perfect office space for any business is fun, time consuming, tedious, and definitely requires the help of a professional commercial office broker. If you have 10 or less employees, then on-demand office space at the Atlanta Tech Village would likely be the best solution.
What other key points have you negotiated in your own office space lease(s)?
When a software company is in the early stages of existence, all they have to worry about is doing whatever it takes to get their application in front of as many potential customers as possible without worrying about a repeatable sales process. Once a company reaches a certain point, such as surpassing the million dollar milestone (or whatever metric applies), then it becomes increasingly necessary to create a scalable & repeatable sales strategy.
In order to continue our high growth, we have adopted a new sales strategy at QGenda to make our customer acquisition methodologies more repeatable no matter how many sales people we add to the team over time. The first major change was defining the structure of the sales team, which consists of a 4 year goal oriented promotion track of Business Development Rep (BDR) –> Account Executive –> Sr. Account Executive –> Sales Team Lead.
At QGenda we have an extremely high closing ratio (45%) for prospects that take the time to see a webinar, so for us it is important for the BDRs to constantly be setting demo appointments for the Account Executives. As a Business Development Representative you are expected to:
- Send 15 new prospect cold emails per day
- Send 15 follow up emails to previous cold emails from 3 days ago
- Make 15 calls to follow up emails sent from 5 days ago
- This equates to a minimum of 45 prospect touches per day
- Set 25 demo appointments per month (only count those that get performed)
Once a BDR reaches a specific goal (e.g. 250 demo appointments get performed) then the BDR should immediately be promoted to the Account Executive position. As an Account Executive they are responsible for performing demos, providing proposals, and closing hot leads. The Account Executive and Sr. Account Executive get promoted to the next level by booking $1MM in recurring revenue. Sales people are typically very competitive and goal oriented, so defining sales goal parameters that lead to promotions helps create a healthy motivated sales team.
What other ideas can help create a repeatable sales process?
Last week’s post about sharing company success by offering stock options covered a lot of the basic structural details around implementing an employee sock option plan, but one major point left unanswered is who gets what and how much? The most common way to discuss stock options is in terms of percent ownership, but many entrepreneurs (including myself) prefer to present stock options in dollar values with an expected outcome based on growth over a 4-5 year period.
Here are some common percentages of non-founder employee stock options:
- CEO/President ~ 5%
- C-Level (COO,CFO,CTO,etc) ~ 2% – 3%
- VP ~ 1% – 2%
- Director ~ .5%
- Manager / Senior Engineer ~ .2% – .25%
- Engineer / Consultant / Advisor ~ .05% – .15%
These are well known industry standard non-founder equity percentages, and it’s important to note that founder equity is an entirely different and more complex calculation based on a lot of parameters.
When discussing stock options with employees, I like to stay focused on the outcome of what these options could amount to using examples. For example (using easy numbers), if someone is granted 10,000 units with a strike price of $1/unit and the company grows at 60% year over year for 5 years, then those stock option are now easily worth $10/unit which is over $100k total. It’s much more exciting to think that 4-5 years of hard dedicated team work could pay off 10 fold for everyone, versus just telling each person individually that they have .1% ownership in the company.
What are some other key points when determining non-founder stock option equity grants?