Some founder reflections from the trenches
While Vest still has the same mission that it did when our investors backed us in the boom times of 2021, it is not the same company as it was in those days when time and money felt unlimited. And I’m no longer the same founder. As we head into a funding round, current and potential capital partners have a right to ask: What have you learned? How are you different today than four years ago? And what does that mean for your company?
Here are a few personal reflections, made with love and appreciation for everyone who’s been a part of this journey, including those I’ve beefed with from time to time. I hope that it helps investors get to know me and Team Vest better. I also hope that it’s helpful to a couple of founders, particularly my fellow first-timers. Count on screwing up and learning a lot, but hopefully if you’re reading this you can avoid some of my more obvious errors.
Build a product that works, then build a company
Product-market fit is literally the only thing that matters at your startup, and therefore in the early days it’s pretty much all that anybody should be working on at your company. Sure, you’ll have other supporting functions, like legal, finance, and–if you work in a regulated industry–compliance, but all of these functions are in the service of getting a 10x-better product into the hands of users and winning the market. No one at your company should see their role in purely operational or departmental terms.
I can’t believe how many people we had working at Vest in late 2022, before hitting product-market fit. We had dedicated roles for HR, office admin, a paralegal, and very nearly hired a CFO. This had two consequences:
- It increased our burn and reduced our runway.
- More importantly, it added a lot of people to the payroll whose job was not waking up in the morning and thinking about how to build a winning product.
All of that extra communication and organizational complexity distracts you and your company from what must be its single objective: building a 10x better product. Forget about how you’re going to build your company until you’ve figured out how to build a winning product.
Build a product that works, then build a marketing organization
Building an efficient, scalable distribution channel is incredibly hard. But without a winning product, it’s closer to impossible. And, yes, distribution will never take care of itself and you 100% need to engineer for it. But don’t get it backwards: first you build a product that’s so good that it begins to grow through pure word of mouth; then you build a product-driven flywheel that unlocks massive scale.
I set multiple directors of marketing up for failure by sending them out to distribute a product that was not in the right place at the right time and that lacked compelling differentiators. The users that we acquired liked the product, but our CAC was too high. This had two consequences:
- It increased our burn and reduced our runway.
- It meant that we had a lot of people thinking about how to distribute our product, rather than obsessing over the first principle of product-market-fit.
At the end of the day, people will do the job that you hired them for. Very, very few people will think holistically about their role and say “I actually don’t think you need me in this role right now–why don’t I go over there where I can have more impact?” If you hire a marketing team, they’re going to market the product that you have with the resources that you give them. If you don’t have product-market fit, they will fail.
Forget about building a marketing team–and definitely forget about vanity metrics like number of downloads–until you have found product-market fit. Engineering for distribution will still be hard after you’ve achieved PMF, but it will at least be a winnable battle.
Find your convictions, and have the courage to act on them
One of life’s great arts is learning when to listen to yourself, and when to listen to others. This is especially true when you are operating at the limits of your professional abilities, as I have been for three years as a first-time founder. For this reason, many first-time founders are overly-prone to listening to other peoples’ advice.
There’s no easy fix here: the confidence and skill of a tested operator can only be earned in the school of hard knocks. Wisdom and discernment take time to cultivate. Yet it took me too long to internalize something very important: as the founder, at the end of the day I am the only one accountable for what happens at my company. That investor, or that early employee, or that founder friend may all mean well, but if you take their advice and override your own intuition, you and you alone will be responsible for that decision.
I listened to a lot of voices other than my own in the early days about who to hire, fire, how to market, how to build, whether to IC, etc. etc. In hindsight, I was allowing my lack of self-confidence to blend with a degree of intellectual and moral complacency. It has always been my role to take risks, make hard calls, insist on more details, ask “why?” like seven times, become more informed, push my comfort zone, and build myself into a better operator.
There are no shortcuts. Do the hard work to find your convictions, and then muster the courage to follow them even when they’re unpopular. If you don’t find your inner voice and act on it, failure is almost guaranteed. If you fail with conviction, you’ll at least fail honorably.
Hierarchies create bureaucracy and squash innovation: be a team of individual contributors (ICs)
One of the stupid things that I allowed myself to listen to in the early days of my company was the “my time is too valuable to be spent on individual contribution. The role of a founder is to hire the best people, communicate vision, and manage those people well.”
This is bullshit. Yes, you do have to hire excellent people: that’s obvious. Yet, Founders–or at least co-founding teams–must be capable of directly IC’ing every PMF-related problem at their company in the early days. There is no other way to exercise the level of attention to detail and the deep, analytical thinking required to solve hard problems. No one can push the envelope at your company like you can, and no one can tie together disparate perspectives into a comprehensive whole like you. At the same time, your operators and your builders have deeper domain expertise than you. When you rub up against the same problems that they deal with every day, your vocabulary–the richness of the conversations that you have–will increase exponentially. Everyone benefits from this.
We recently flattened the org chart at Vest while Paco and I doubled down as ICs. We have no full-time managers, and everyone is on the front line. The business has never worked better, and we will never go back.
Don’t take it personally: wake up every morning and be better
When you are a startup founder, people will tell you that your baby is ugly. VCs who promised you the moon and the stars to get into your round when it was hot won’t put in a dollar if they lack conviction about where you’re headed. Employees will second guess your choices and privately mumble about you being an idiot or a hard-ass. Sometimes they’ll call you out in public. Customers will be unreasonably demanding and heap scorn on your mistakes.
It can all feel pretty personal.
Yet, here’s the bottom line: if you can’t raise capital, it either means that your execution is weak, your storytelling is off, or both. If you’re having problems with your employees, it means that you either hired the wrong people, or you’ve failed to inspire and support them. If customers are complaining, you either haven’t found the right market, or you haven’t built the right product.
It’s on you. Figure out how to do better. As you develop your own convictions and learn to follow them, you will learn to discern when you can correct problems with better execution, and when you are confronting something beyond your control that requires a fundamental change in approach. Regardless, “radical ownership” needs to be your default posture at all times.
Don’t take it personally and don’t get defensive. Get better.
You can only hold your team to the standards you model
Do you want people to take time and money seriously at your company? Take a pay cut and model frugality when you travel. You expect on-time delivery at a high level of quality? Get into the weeds of your own product to understand how it works. You want your team to work hard for you? Unblock them and give them the resources they need to achieve their missions.
I thought that I was operating this way in our early days, but I had so much room to grow. You really do get out what you put in. People can intuitively sense when your beliefs, actions, and words are aligned and when they are not. When they see alignment and trust that you will go to work for them, you will get incredible results from your people. Without this, you’ll muddle through and will probably ultimately fail.
Insist on founding team members taking equity over cash
The closer someone is to the origin of your company, to where it all begins, the more willing they need to be to take equity in exchange for cash. This is critical. Someone who’s compensated primarily with cash will see your startup as a job. They will frame their role as the role of an employee, and they will–consciously or subconsciously–create boundaries and parameters for that role that undermine the entrepreneurial mindset that you need them to have.
On the other hand, when someone takes equity instead of cash they are long on the future. There’s a deeper sense of connection to the mission, because that meager little founding team salary doesn’t leave room for much else when finding a way to stay motivated through the daily suck.
This is not some chest-poundy “be hard core” kinda thing. I don’t expect anyone at my company to work harder than me or to take the same level of pay cut. That wouldn’t be a fair trade, given the unequal levels of equity that we have. Over time I have come to respect and appreciate the incredible professionalism and commitment that skilled, relatively highly-paid team members bring to the table. Yet, for anyone who’s earning more than 0.5% or so of equity at your company, the equity for salary trade needs to be dramatic. If it is not, you are setting yourself up for heartbreak down the road.
I tried backing into this, giving people at my company who were highly paid more equity to try to make them care more. It didn’t work. People either have the entrepreneur’s mindset or they don’t. You cannot teach it, and you cannot force it. The best way to screen for it is to insist that your core team take the pay cut, go long on the equity, and take a bet on building the future.
It’s all about people
Company’s aren’t families, but they are communities. They are communities of people who bring their skill, their heart, and their flaws to work everyday. I spent way too much time in the early days of my company in an org chart that was way too corporate, always demanding more, and being perplexed when I didn’t think that I was getting it. Because of this, I missed out on the opportunity to diagnose and fix fundamental problems much sooner.
Even worse, by not being closer to the team–closer to the people–I missed their brilliance. And we have some truly brilliant people at Vest. Startups are hard. You have to fire friends sometimes. And sometimes people you care about and respect decide it’s time to walk away. Yet as I’ve learned to listen, learned to receive, and started to really tune in to the work the our team is doing, I have fallen in love with our company again. Not for superficial or sentimental reasons, but because they are truly a crew worth fighting for, who are capable of great things.
Our customers are people, too. They have families, hopes, and dreams. When they put their savings on our platform, they do so in the hope that they will grow and one day support them and the ones they love in living their fullest life. The question of how to build a differentiated product and charge for it has started to feel much different as I’ve returned to the question of why we are even building this product in the first place.
Being a founder is a grind, but it’s also the best job in the world. I suppose this note has just been a really long way of unpacking what still feels like the best business advice I’ve ever read: “great companies prioritize people, product, and profits, in that order.”
Happy building, and wishing you peace and good fortune along the way. Thank you to everyone who has been and continues to be a part of this 🙏
Vest is raising $4M to build the future of global, AI-powered investing. Check out our demos here and here, or download our app and request access to the Vest AI live private beta. Here’s a blurb:
Vest’s mission is Financial Freedom for the world. We are leveraging data science and AI to create a smooth on-ramp for aspiring investors, while supporting experienced investors as they grow. We turn our customer’s financial aspirations into reality, wherever they live and regardless of their starting point.
With $140M in assets across 130 countries, locally integrated banking through the Americas, and 50% MoM growth assets under custody growth for customers we acquire organically, we are raising $4M to hire engineers to build the world’s most people-centric, intelligent, and fully customized investment experience. We seek a mission-aligned partner to join us as we first catch — and then create — the upcoming wave of transformation in global investing.
To learn more, feel free to reach out to aaron [at] mivest [dot] io.
