Spending money isn’t easy: How getting Series A funding has forced me to change my mindset
Summary - Embrace the challenges of startup growth post Series A funding. Learn to say 'yes' to strategic spending and adapt to a growth-focused mindset.
For any startup, getting funding from investors is a huge step. The founder who has been daydreaming about what they would do if they suddenly had a pot of money to play with can now turn those dreams into reality.
But I’m learning that spending money isn’t as easy as I thought. Since we got our Series A funding from Insight Partners last year, I’ve realized that I have to completely change my mindset, about money and about how the company is run. After years of being a careful spender in full control of things, that’s no small feat.
This post is about what I’m learning on that journey.
I’m learning to say yes
When you’re a bootstrapped company, as Knak was from the time it was founded, you say no a lot. Every time someone came to me with an idea for a project that required spending money, my instinctive reaction was to look for ways to avoid any outlay of cash.
I’d ask whether the suggestion was really necessary, or whether it could be done more economically. Or I would ask whether it could be put off for a while. No matter how good the idea was, I worried about what it would cost and how it would affect our bottom line.
Now, I have to get used to saying yes. It’s amazing to me how difficult it is to accept that. It was easier to say no to everything! I now have to identify priorities as I evaluate proposals, because I can’t just accept every idea.
But that presents a challenge: What do we start with? What’s more important? What spending will make the biggest impact? What do we need for the company right now?
Learning to say yes is hard!
I’m learning to accept that we need to hire
Often, when an issue or problem is raised, someone will suggest we hire a person to fix the problem. In our growth plan, we had already identified a number of positions we wanted to fill in the short term. But as things develop, we are realizing that we need even more people to help with new things that have come up.
For example, our recruiting team has been growing. That team uses a lot of technology and just recently we realized we need a person just to run all the technology for the team.
This wasn’t in our hiring plan. But we have the ability to do it anyway. I have to learn to accept that we can do this.
I’m learning to accept that it’s OK to make a loss this year
From the moment we started Knak, we worked hard to make sure we turned a profit every year. For the last 10 years, that concept has been baked into my DNA.
But now that we have investor funding, making a profit every year is no longer a requirement. In the short term, our focus is growth, not profit.
That is because, for SaaS companies, growth is a critical metric and the driving force behind company valuations. Our investors will be satisfied as long as we grow at a good pace.
Accepting that requires me to flip a switch in my brain.
I’m learning to balance work culture and growth
We have realized that we need to put some effort into maintaining our work culture even as we grow. Our work culture, with among other things its emphasis on work-life balance, is the reason people come to work for us. We want to enjoy the growth journey, and we want it to be fun for everyone.
We’re learning to balance growth and fun, so our culture remains intact.
I’m learning I can’t know all the employees the way I used to
When we were bootstrapped, we were growing, but growing slowly. I had time to get to know new hires personally, because we’d never have more than one or two people start at the same time.
Now, we can have five new people start on the same day, and five more the next week. It’s got to a point where I sometimes don’t even meet one week’s hires before the next new group shows up. And it’s embarrassingly hard to keep everyone’s names straight.
We’ve got about 55 employees now. I can’t imagine what it’s going to be like when we have 100 or 1,000!
The bottom line is that my expectations have to change. I have become busier, and more people are joining the team. I have to accept that I just can’t get to know people like I used to.
I’m learning to let go
Learning to accept that I can’t know all the employees personally is part of a bigger issue: I’m learning to let go. I can’t be as involved in everything as I was when the company was smaller. I can’t be a part of all the decisions. I can’t know what everyone is doing. There’s just too much happening. I have to let go and trust the leadership team.
That’s a big change for me! I’m learning that my role is to provide the guiding light at a very high level. I need to give people general direction, and let them figure things out on their own.
I’m struggling with this. Letting go doesn’t feel natural when I’ve been so involved in everything for so long. My leadership team feels the same anxieties. Did we hire the right people? Will they execute things the way we want them to? It’s a leap into the unknown, a leap we have to make.
I’m learning what it’s like to report to someone
I now have someone to report to – our investors. They have expectations, and I have a duty to be accountable. In the past we set targets, but they were just numbers. There were no consequences if we didn’t meet those goals.
Now, things are different. I have to answer for our performance. Having stakeholders with expectations adds a level of pressure that didn’t exist for me before.
We’re learning to pace ourselves
All of us on the leadership team are very driven, Type A personalities. We put a lot of pressure on ourselves to meet our targets.
We can feel the pressure increasing and of course we want to start off on the right foot with Insight Partners. The temptation is to go all out.
But it’s just not sustainable to go at full tilt all the time. We don’t want to burn out. We’re in a marathon, not a sprint. So we on the leadership team are learning we have to pace ourselves as individuals.
The same applies to growth. I think the smart and sustainable thing to do is to ramp it up.
We’re learning we can ask for help
The flip side of having someone to answer to is that we now also have someone to turn to for help. We no longer need to figure it all out ourselves; we can turn to Insight Partners for assistance.
For example, they were amazing when it came time to help us find candidates for vice-president positions, and they did the vetting of finalists. Having someone like Insight interviewing candidates and providing a second opinion on people was wonderful.
We have developed a good relationship with Philine Huizing, our main contact at Insight Partners, and it feels like I have a good partner who celebrates our successes and calms me when we hit a rough patch. They’ve seen it all before.
An added bonus of working with Insight Partners is that they give us a level of credibility we didn’t have before – credibility with banks (which now suddenly seem eager to do business with us) and with potential employees. We are now able to attract people who previously wouldn’t have considered us.
In the final analysis, we’re learning to accept that things are going to change as we grow. The business will change, and relationships with people will change. But what shouldn’t change is our fundamental values. Growth is a by-product of having a good work culture, of having happy customers and building a great product. In the end, we need to keep in mind that the pressures of growing shouldn’t diminish the other things that make a business successful.
Co-Founder & CEO, Knak
Pierce is a career marketer who has lived in the marketing trenches at companies like IBM, SAP, NVIDIA, and Marketo. He launched Knak in 2015 as a platform designed to help Marketers simplify email creation. He is also the founder of Revenue Pulse, a marketing operations consultancy.