The most useful hire you didn’t know you needed to make
David Peterson

If the founders I speak to are any indication, it’s hard to hire across every role these days. Solid VP Sales candidates are worth their weight in gold (or the equity equivalent). Engineering talent is as rare and highly prized as ever. Looking for a product designer? Good luck. I met one last week, but after off-handedly mentioning one of our portfolio companies, she disappeared in a puff of smoke. I think I spooked her. It’s tough out there.

But there’s one role above all others that seems to bedevil every founder I talk to. Not just because it’s important, but because it’s so ill-defined. The role I’m referring to is of course: the early growth generalist.

What’s that, you say? Don’t you mean a product growth leader? Or a demand generation professional? Or a content marketer?

No! This role — the early stage growth generalist — is the most useful hire you didn’t know you needed to make.

Imagine this. You’re seeing low hundreds of sign ups per day. Weekly or monthly active users are in the low to mid-four figures tops. Maybe you’ve started monetizing, maybe not, but you’re starting to see the glimmers of product-market fit, both through an increase in weekly active users and some organic growth through positive word-of-mouth. You have an intuition that certain growth channels and tactics might work really well for you, but you don’t have definitive evidence on any of them yet.

There’s just one problem. You’re so busy hiring, selling, fundraising, and building the product, that you don’t have a spare moment to figure out which of these growth strategies will be most important for your business. Content? Community? Demand gen? Onboarding? Who knows. You have too many ideas, and too little time. What you need is, well, another you.

This is the void that an early growth generalist is meant to fill.

Where do you find this sort of person? They may be the most rare of all, I’m afraid. I’ve found that former founders are often the best fit for this sort of role as it gives them the extreme autonomy and uncertainty they constitutionally require. But those types of people don’t fall into your lap every day.

This role often comes up after founders ask me for advice on setting up a growth team. So after discussing what an early stage growth team should look like for the tenth time in so many weeks, I decided to write up some thoughts, which you can read here. Hope this helps some of you out there as you think about what kind of growth team you need to build!

And if you want to go deeper, this post was also inspired by our recent Insights session with Darius Contractor, a product and growth leader who has led engineering and growth teams at companies like Facebook, Dropbox and Airtable. Definitely worth a listen if you haven’t had a chance yet.

Regards,
David

EVENTS

Feb 23 / Compliance Tech: Building Pain-Killers
Eynat Guez, CEO of Papaya Global & Neta Meidav, CEO of Vault Platform

Mar 23 / The Importance of Culture and Values As You Scale a Business
Oren Kaniel, Co-Founder & CEO, AppsFlyer

FROM THE BLOG

The Problem with Engineering-led Growth for Early Stage Startups
What kind of growth team you need to hire depends on the stage of your company.

What Childhood Can Teach Us About Entrepreneurship
Childhood as a solution to the early stage entrepreneurship explore–exploit dilemma.

How to Overcome “Customer-Built” Software’s Learning Curve
“Customer-built” companies and the challenge of user activation.

The Long Road to Creating a Category
Category creation strategy, with a little inspiration from Apple.

EUROPE & ISRAEL FUNDING NEWS

UK/SME Financial Services. Wayflyers raised $150M for its revenue-based financing platform.
Finland/Database. MariaDB closed $104M for its merger (SPAC) to join New York Stock Exchange, the company is well known for being one of the most popular open-source relational databases.
Norway/Analytics. Dune Analytics raised $70M for its cryptocurrency analytics solutions, allowing anyone to create SQL queries on blockchain data.
Israel/Data Tooling. Pecan AI raised $66M to aid business intelligence, operations, and revenue teams to predict “revenue-impacting risks and outcomes” without the need for data scientists.
Netherlands/E-commerce. Channable raised $63M for its automated product comparison for retailers.
Israel/Financial SaaS. Torii raised $50M to help businesses manage their spending and subscriptions to SaaS applications.
UK/ML Tooling. causaLens raised $45M for its AI technology quantifying cause-and-effect relationships to reason alongside humans in a manner that is explainable, and fair.
France/HR. Snapshift raised $45M for its HR platform for managing the deskless workforce.
Israel/Security. Talon Cyber Security raised $43M for its cybersecurity browser.
Germany/Energy. Marvel Fusion raised $40M for its quantum-enhanced and laser-induced clean fusion energy systems.
UK/Design. Veed raised $35M for its online video editing platform.
Germany/Industrial. Flip raised $30M for its employee information communication solution for deskless workers.

WORTH READING

ENTERPRISE/TECH NEWS

Earnings season. It’s earnings season on Wall Street. Amazon set the record for the single biggest daily gain in market capitalization in history ($190B) on the back of strong AWS results. Google blew the doors off its earnings as well. Meta (Facebook) set the record for the single biggest daily loss in market capitalization (-$250B). On balance, markets were up for the week — but volatility remains sky-high and late-stage VC investors (the kind that spend a lot of time thinking about IPO windows and public market multiples) appear anecdotally to be increasingly skittish.

Google’s big cloud quarter. Specifically, Google Cloud Platform results were impressive, generating over $22B in annual run-rate revenue. Techcrunch Extra reported on this in depth. Here’s an excerpt: “John Dinsdale, chief analyst at Synergy Research, a firm that keeps close tabs on the cloud industry market, says the loss isn’t worrisome at this stage. “Google Cloud reporting a loss is not a big deal at all. Businesses of this nature require a lot of upfront investment and buildout of infrastructure and often don’t break even for several years,” he told TechCrunch. “AWS made a loss for many years and was quite clear that it was making a conscious choice to plow cash being generated back into investing in the business. Alibaba Cloud has only recently started to generate operating profits for the first time.” [CFO Ruth] Porat’s comments in the earnings call confirmed this assertion when addressing capital expenses (capex). “The results in the fourth quarter primarily reflect ongoing investment in our technical infrastructure, most notably in servers, to support ongoing growth in both Google Services and Google Cloud,” she said. In other words, they are adding capacity to keep up with growing demand.”

MariaDB going public? It looks like MariaDB, the community-developed, commercially supported fork of the MySQL relational database management system is gearing up to go public in the US via SPAC. The company has significant roots in Europe, having been founded by Michael “Monty” Widenius in Finland in 2009. The SPAC is being seen as a test of public market appetite for open-source and data infrastructure companies. “Therefore, if the SPAC deal performs well when it trades, it could lead more private software companies to try to follow the path that MariaDB forged. If the deal follows other SPACs downward, well, it will be even more clear that SPACs will wind up a failure when it comes to unlocking mass unicorn liquidity.”

Citrix is taken private. The iconic remote desktop virtualization company was acquired by two private equity firms at a $16.5B valuation. The new owners plan to merge it into TIBCO. “The merger, a sign of ongoing consolidation among pure-play software providers, will result in a combined base of 400,000 customers and 100 million users in 100 countries, according to the company. Its customer base will include 98% of the Fortune 500. The Citrix deal exemplifies consolidation in the IT market, as pure-play companies become an attractive target for mergers and acquisitions. The enterprise IT space features a few recent examples of moves toward a private company structure. In December, cloud-based security software provider Mimecast agreed to go private in a $5.8 billion cash deal with private equity firm Permira. Prior to that, enterprise data management firm Cloudera also went private in June, after agreeing to a $5.3-billion acquisition deal to a group of buyout firms.”

Why quantum is still anyone’s game. David Roe argues that while big tech is ahead in the quantum race, the market is so nascent that it’s still “anyone’s game.” “Trying to identify a top player in a field that has yet to develop may seem a tad premature, according to tech advisor and entrepreneur Vaclav Vincalek of Canada-based 555 vCTO, which advises startups and growing companies on technology. He said that could lead some to believe that quantum computers are production-ready, that they’ll replace “classical” computers shortly, and quantum computers are faster. “Quantum computers are still a lab and research thing,” he said. “Even the case studies coming from D-Wave, the most advanced quantum computer commercially available today, show that the practical side of quantum computers is years away.”

A twitter tizzy. Twitter is all a-tweet about the metaverse and Web3 and what it all means.

HOW TO STARTUP

Be a camel, not a unicorn. Sophie Shulman revives Alex Lazarov’s “camel” concept, arguing that right now, founders should focus on longevity and sustainable growth. She makes an interesting case that it might be easier to build a camel outside the US.

A guide to startup compensation. A great and useful guide to startup compensation from our friends at Point Nine. I’d go as far as to say it’s a must-read, providing a useful framework for how to think about this massive challenge holistically. “Recruit candidates who value what you have to offer. Recruiting a candidate who is looking for growth, learning, excitement, likes the problems you are solving, and is willing to take some risk is a good use of your time. Someone who wants a safe choice and a guaranteed outcome is not. If you find yourself twisting a candidate’s arm to turn down an offer at a big company to join your company, you are probably talking to someone you shouldn’t pursue since they haven’t yet decided what they value.

Your recruiting process needs to attract the kind of people who value what you can offer. Be explicit about who you need in your job descriptions. Train your team to share with candidates what your company values, both the good and the bad. Disqualify people early in the recruiting process as soon as you see that you are not what they are looking for. Be honest and frank about the risk of failure, but also get them excited about the opportunity for growth.

Sell the opportunity. Never assume that someone wants a job just because they are interviewing with you. The best candidates have lots of options, and they are interviewing you just as much as you are interviewing them. Throughout the recruiting process be polite, respectful, and leave lots of room for questions. Once you’ve decided there is a match, walk them through your fundraising pitch, your strategy, and your operating plan. Give them a demo and have them meet your most compelling team members. But even folks who value the learning, excitement, and upside of a startup still need to get paid, and you will struggle when your budget doesn’t seem like it will stretch to hire the people you need.”

HOW TO VENTURE

Pre-IPO returns. The Information takes a data-driven look at the returns of late-stage, pre-IPO investing. Interesting reading. “Data on three decades of IPOs from Jay Ritter, a professor at the University of Florida’s Warrington College of Business, show that while shares rise an average of 18% on the first day of trading from their IPO price, they only increase an average of 6.5% in the six months after. Investors in the pre-IPO rounds face better odds because they pay less. “When people are investing in a pre-IPO round, they’re not willing to pay up as much as they would if the stock was fully liquid,” Ritter said. Enterprise software companies Datadog, Zoom and Snowflake had the widest gaps between their last private fundraise and their current share price. Datadog shares have risen a whopping 6,350% since return investor Iconiq Capital led its Series D in December 2015 (Datadog split its stock twice following the Series D which diluted the value of each share). That easily outpaces the more than doubling of the stock since it began publicly trading in September 2019. On the flip side, shares of UiPath have made one of the biggest drops since their last private round. Shares of the robotic process automation company, which raised a Series F funding round in February 2021, have fallen 40% since that round and are down 43% since it went public. Coatue Management, Industry Ventures and Alkeon Capital Management were late-stage investors in UiPath. Retreats like those have been far less common than gains from the pre-IPO round, however. That means the most active firms in the latest-stage rounds have been associated with the biggest gains.”

How to actually be helpful in real life. Our friend Finn Murphy at Frontline offers advice on how to actually be helpful.

PORTFOLIO NEWS

Firebolt was selected as one of CRN’s 20 coolest cloud software companies of the 2022 Cloud 100.

Budibase’s Co-Founder, Martin McKeaveney, was interviewed for Console.

Aspecto created the Definitive Guide to OpenTelemetry.

CruxOCM released their second podcast episode, featuring an interview with their investors, including Gil. The investors talked about why they invested in CruxOCM, Robotic Industrial Process Automation and what they see as opportunities in the energy sector for startups.