Managing a startup across three continents

Our startup now consists of 13 people.  8 of us are in our Berlin Headquarter, 3 are in the US and 2 are in Australia.  Our customer are 70% US-based, 10% are in Australia, and 20% are”rest of the world”.

Sometimes this raises an eyebrow or two – being such a small company and yet covering 4 time zones seems very demanding. But I feel that it’s nowhere as hard as it seems, so I wanted to share what I personally feel is important to get such a distributed company going.

In my opinion there are two things that need a bit more thought than in a one-office-company:  Communication and Recruiting.  But as you can imagine, recruting and communiction are important for any company that wants to be successful. You don’t need to reinvent the wheel here, just pay a little more attention:

Communication

Once your company falls into different silos, you’ll end up with inefficiencies, us-vs-them-thinking, maybe even hostility and information-hoarding. Large companies exhibit this very often, but it can happen to anyone. The cure is simple: Hire team players and then share as much knowledge as possible. Encourage direct and group-communication. Share notes after meetings. Etc. It’s not magic, it merely needs to get prioritized.

You’ll need tools to support the different forms of communication. We use HipChat for direct messaging and group messaging and for 1:1 video and audio calls. We use Confluence as our internal knowledge base and discussion forum, Trello for day-to-day work planning, and JIRA is for bug tracking. We use Skype and the phone a lot, and of course there are a couple of specific tools like CRM, Support Desk, Invoicing etc, and most people have access to all these tools too.

The main challenge is to actually use the systems a lot, because it always takes a few extra seconds to put everything relevant into Confluence for the others to see, to not hesitate to chat to the person on the other continent, to actually call frequently and not just rely on mail.  While it’s important to avoid useless meetings and interruptions, we constantly encourage a spirit of “it’s okay to ask someone remote for help” and “it’s okay to spend 5 extra minutes to share this interesting marketing insight”.

Gentle pressure is key. When I receive a mail that contains a suggestion, I often respond “why is this not in Confluence so everyone can contribute?”. When someone has experienced something cool during a client visit and maybe snapped a photo: Share it in HipChat as if it was Instagram. So along these lines the dev team shares their weekly status meeting notes with the marketing team, the marketing team shares the revenue numbers with the dev team, all using our electronic means.

Such transparency would be a big plus for a one-office company too, but it’s a must-have in a distributed startup, or you will encounter a huge disconnect soon. Fortunately, it’s not hard.

In addition to using technology, plain old traveling and face-to-face meetings can be super helpful too. Our Sydney-based director of marketing Linda has been traveling the US twice now and dropped by the Berlin HQ as well on the way back. And two months ago we flew the entire company to New York for a week-long team event that incluced a hackathon, customer visits, brainstorming, and a lot of sightseeing. It’s expensive if you just look at the bills, but helping a distributed team gel and avoiding a disconnect between development and marketing/sales/support is priceless.

Recruiting

The recruiting process is the most important process in any company. Hire two or three caustic employees and morale of the entire company is down the drain. You have to be very careful even if you’re only hiring for one location. In our case, every promising developer needs to come in for two days of trial work. This is how we can judge their coding skills better (in a more relaxed environment than in a tech interview) and we can also tell if someone will be a good social fit.

If you hire someone abroad without ever meeting them in person, especially the first person in a new location, you’ll want to be even more careful. But it’s not exactly rocket science either. In our case, we’re looking for customer success representatives who need to be tech-savvy and able to engage with leads and customers alike. So we’re quite demanding in the second and third interview, in that we ask applicants to conduct a live demo of one feature of our product to us. Once we can tell a person is a good fit, we’ll start two weeks of intense  remote onboarding: Learning the product, listening in on 10 to 15 product demonstrations, and preparing for a full demo. Since it’s all remote, we need to force ourselves to check in with the new hire frequently (after all, they might leave us if they feel disconnected). But once those two weeks are over and the new person likes their work, there’s really no more magic to it. General communication (as described before) is then the key driver to keep remote workers engaged.

In summary: Bliss!

And that’s all there is to setting up distributed teams. In everything else we’re just like a normal company, and probably “distributed” is the “new normal” in a few years anyway. But right now I keep running into people who stare in disbelief, and so I just had to get if out of my brain. By spending slightly more effort on Recruiting and Communication, we’ve been able to build a very focussed company. We’re still small, but we’re recently suprassed our first million in annual trailing revenue, so we are serious about this. 🙂

Company update Q1 2014

After blogging our financials publicly two months ago, we decided to try posting our quarterly update onto our blog as well. Let us know in the comments if this is helpful, or if you (especially as an applicant) would like to learn other things than this.

Financials

Our financial situation continues to be great. We made $320k in revenue in Q1. Our growth compared to Q3 and Q4 2013 has slowed down, it looks more like linear growth now, which is a bit sad.  But if you look at the Monthly Recurring Revenue stats, the trend is still accellerating. We have signed up a few new clients who chose to pay quarterly or even monthly, so we don’t get the big upfront lump sum as before, which immediately shows on the total revenue chart. But our MRR is still growing nicely, which can be seen on the second chart.

Total quartely revenue

q1-revenue

Monthly recurring revenue:

mrr

Also, our customer number (the grey line) continues to rise quickly. We should probably start separating that one out per plan, customer size or revenue, but right now that’s the detail level we have.

Our bank account has grown a lot, to a whopping $340k. This is of course due to the fact that we didn’t manage to hire more people, so we hope to reduce that a bit soon. See below!

Customer Success & Marketing

Overall the CS team is doing just great! We brought on James in San Francisco, and we’ve been able to conduct tons of webinars, visit many customers in real life, and our support tickets get answered within hours rather than days (except when it’s about acutal bugs, then it takes longer, because the dev team is overworked).

The SF team loves to work remotely

We continue to be very unhappy with our CRM solution Pipedrive. Although we’ve been on calls with them and explained all the things that are broken in Pipedrive, their reaction was “well, we understand why you’re annoyed, but we have no plans to fix these problems”. We evaluated 10 other tools, but none seems to be able to understand basic things. For instance: “if I add a person with an email @company.com then that person and all their notes should automatically show up on the company.com general account. And if I add a contact to that company account manually, all exisisting notes should also show up for that company account”. This is entirely standard behaviour in helpdesk systems like Freshdesk or Zendesk, but apparently totally unheard of in sales-focused CRM systems. (Yes, Highrise had that feature, but no proper pipeline management, and it’s being discontinued anyway).

Development

We have five main features in the pipeline: 2-step verification, new Performance-review and 360 review overview screens, REST API, Likert-scales for peer feedback, and our iOS app. All look very promising, but none went beyond alpha or beta stage in Q1. That’s quite unfortunate. Now, the overview screens are looking amazing, and 2-step is really almost complete, but they were simply not production quality yet.
On the plus side, we’ve started working on an improved user directory while we were looking at the results from the beta of the overview screens, and that has progressed really nicely, and will be quite amazing once it launches. We also spent some time overhauling our “about us” page and our careers pages, which look awesome now. Next up, we’ll finally get cranking on the landing page, which looks terribly outdated by now.

One of the main challenges we continue to face is that we don’t have enough developers to work on all the things we’d like to:

Recruiting

Recruiting developers remains tough, it continues to be our main blocker. We simply don’t get enough good applications.  We’ve done a lot in terms of corporate branding: We’ve attended many user groups and technical networking events, we’ve sponsored conferences and spoken at some (Berlin Developer Days, StartupCamp, Backend Meetup, AngularJS meetup, to be precise). We’ve been featured in Gründerszene and in Berliner Morgenpost. We’ve conducted a Hackathon and blogged technical articles, and of course we’re trying to show that we’re a solid company by blogging our financials. It has paid off a bit in that we did receive a few more applications than before, but quite a few of those were from developers who were just too inexperienced. Even for our junior positions, we expect that an applicant has coded stuff for fun for a while, and has interned at one or two demanding companies.

We do have two senior developers in the pipeline, and a web design intern just signed up for a July start date, so the Q2 outlook is very promising. But if we look at the naked Q1 numbers, we simply didn’t manage to hire a single new developer. Here’s our careers page by the way 🙂

Business Development

We made a huge mistake in choosing our law firm for setting up our legal entity in the US. What was promised to take 3 weeks has now already taken 2 months, and there is no end in sight. We keep emailing our contact and all we get is excuses and “yeah we’re working on it”. Should have done better research. Still, we’re hoping to have our US based limited up and running in the next couple of weeks, so we can start looking for an office in SF and bring on James and Scott permanently.