Hey friends,
Back again with another edition of The Founder Newsletter - this is Episode 9. If you’re new here, my goal is to give you a quick synopsis of what got me thinking from this week’s episode of The Founder Podcast in 5 minutes or less.
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And who are you?
I’m Kallaway - a future founder trying to get some answers before I jump in the ball pit myself.
Let’s get it.
This Week’s Episode (Ep 9) ⚡
Ryan Denehy, Founder and CEO of Electric.
Listen to the episode on Apple Podcasts, Spotify, or Google
Listen to the podcast if you’re interested in…
📊 Comparing and contrasting lessons learned from a 3x founder across media, hardware and software
⚙️ Why the traditional IT landscape is broken and how Electric is radically changing the industry
📣 Why building a replicable sales process early on is key
💰 Words of advice during the fundraising process
👁️ The two most important things to look for when hiring
Summary 🔍
What’s Electric?
Electric has a super simple mission - they’re trying to make IT easier for companies that don’t have a robust IT department.
The reality is that big companies often have lots of IT managers in-house that do things like set-up new computers, install and troubleshoot software programs, build systems, etc. When a company is first starting out, they often prioritize hiring other roles that are product, engineering or sales focused and might add 1 or 2 IT people along the way.
As the organization scales, it can often be overwhelming for those couple of IT people to handle all of the requests for the entire 20-300 person organization. If the IT department is backlogged, it will likely slow down the productivity of the business - which is no bueno.
Electric took the concept of IT and flipped it completely on its head. When you sign up for their service, you basically get a remote IT department. All of your employees can Slack their Electric account team contacts and get their IT problems resolved instantly.
Electric was able to make this happen because of all the cloud software products that are fairly consistently used across new startups today. Most startups use G-Suite for email, Dropbox for storage, Slack for collaboration, etc., so it was easier for Electric to build processes that solve for these particular software programs across all organizations that use them.
For businesses that are big enough to build custom software tools in-house or have a more robust IT department, Electric isn’t as great of a fit because each issue or set of issues requires a custom solve.
Who’s Ryan?
Ryan is a 3x founder who got his start making extreme sports videos. He parlayed that into an online ad network and media company that eventually sold to USA Today Sports in 2008.
After realizing he didn't want to spend the rest of his career in online advertising, he left USA Today and started his first software company, Swarm. The vision for Swarm was to build a google analytics type solution for small and medium sized retailers. Ryan sold Swarm to Groupon in 2014.
During his time building Swarm, Ryan was selling products through a network of local IT providers. When he realized only a handful of the IT providers he was working with provided the expertise and service level he expected, he knew there was an opportunity for disruption. In 2016, Electric was born.
Ryan’s Startup Manifesto 📜
What’s a Startup Manifesto?
At the end of every episode, I ask my founder guests the same question:
If you had to write a Startup Manifesto with 5 of the most important key lessons or pitfalls to avoid when starting out, what would they be?
Here’s what Ryan had to say:
You have to always remember as a startup CEO, your very first job is don’t run out of money. It’s crazy at every stage how often people forget that. You don’t have a business if you don’t have money
You just have to build a product that people love. You can build a tool that you jam down people’s throats, but at the end of the day, the best companies build a product people love, and you have to put that before everything.
Be smart about who you spend time with. There’s a lot of people who purport to be doing extraordinary things who are rather unremarkable people with bad advice. People always say you’re the average of the 5 people you hang out with. I’m not saying you shouldn’t hang out with your friends, but in a professional context, if you’re not the dumbest person in the room, you’re not surrounding yourself with the people you want to learn from.
Don’t ever make excuses for yourself about anything. It’s so easy when the job at hand is so hard to rationalize everything and it’s easy as a startup founder to think to yourself, “my situation is harder.” At the end of the day, there’s a very good shot that there’s nothing unique about your situation, you’re just making it harder.
Ryan’s Thoughts 💭
If you could teleport back and you could tell yourself 1-2 things at the beginning of each of your startup journeys, what would you say…
“Before the first company I would have taught myself to be more strategic. I was really good at chopping wood. My solution to everything was work more, work more, do more work. It was very much a lose the forest through the trees kind of thing. I would just do more to try to make up for the fact that something wasn’t working rather than questioning, “Is this even the right thing?”
At its core it’s the basis of the “work smarter, not harder” idea but everyone says that and many people don’t actually do it.
The second company would have been more about self-preservation. Probably 75-80% or more of the mental anguish and psychological terror was all self-inflicted. No one made us do anything. You gotta remember, when you start a company, most people start from the same place. You’re presumably reasonably intelligent, blank sheet of paper, eyes wide open, market opportunity, etc. You’re all starting from the same place. We just made everything too hard.
We were like delusional about how long it would take to raise money. We didn’t really listen to people’s advice. I didn’t know anything about hiring so I hired the wrong people…
As a result, with Electric, this is far and away the most successful company I’ve started and there’s been some really hard times, but compared to Swarm and BNQT, it’s not even close.”
Why being a founder is one of the hardest jobs in the world…
“It’s the only job on the planet where you’re expected to not know what you’re doing, but expected to produce results consistent with someone who knows exactly what they’re doing.
Like it’s really weird if you think about it. If the New York Jets had their training camp and grabbed a bunch of dudes who raised their hands and said “I wanna be QB” and you put them onto the field and then were pissed that they couldn’t throw a touchdown in a game.
You’d be like that’s crazy - they have no training, they were given no help, I can’t believe they failed - I can’t believe it [sarcastically]. Well I guess it’s a hard job.
As far as I can tell, startups and the music industry are the only lines of work where you take people with relatively little professional experience, hand them millions of dollars and basically no help, and expect the world.”
What Got Me Thinking From the Episode 🤔
After reflecting on my conversation with Ryan, here’s something that really got my wheels spinning:
Hiring at a startup 🙋
There were a ton of gems from this episode with Ryan. In addition to some of the more technical things like building sales funnels and thinking about B2B marketing, he gave some great insight into some of the softer questions around mentality, challenges of being a founder and staying sane through exercise.
One of the other things he mentioned that really struck me was when he broke down his mentality around hiring. He said, there’s effectively two things he looks for when trying to hire for a role:
Stage Fit - Have you done the role you’re applying for at a company of their size before?
Role Execution - Have you excelled at that role before?
And those make sense. If I was hiring a Sales leader for a 25-person company, I’d want to make sure the person I hired had worked in a similar sized company and performed well in the sales function in his/her previous role.
But that made me wonder, and I even asked Ryan this on the show, how does one break into their first role if all founders are using this type of criteria? If I wanted to be a Sales leader, and had never done it before, how do I get that initial experience to justify ‘stage fit’ and ‘role execution?’
Ryan said that in order for someone to overcome not having one or both of those things, they would need to demonstrate that they understand what the entirety of the job would entail (stage fit) and had a plan for how to achieve the desired benchmarks (role execution). He said, when they hire at Electric, they give candidates the top 2 things they’d want them to work on if they got the job and have them spend the next week putting together a plan. This is one of the ways they validate the stage fit/role execution equation on top of past experience and behavioral interview questions.
For me, it still seems like an uphill climb to try and get your first role in one of these functions at a startup without prior experience. Will your resume even get looked at without it?
Anyone have any tips that would share in the comments?
Wrapping it Up 📕
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Till next time ✌️
Kallaway