September 10th, 2020
Waseem Daher is CEO and cofounder of Pilot, which specializes in bookkeeping, tax, and CFO services for high-growth technology startups. He is a three-time entrepreneur with two successful exits: his first company, Ksplice, was acquired by Oracle in 2011 and his second, Zulip, was acquired by Dropbox in 2014. He has a degree in computer science from MIT.
Pilot was very much born out of pain I had running the two previous startups I cofounded with Jeff Arnold and Jessica McKellar — Ksplice (acquired by Oracle) and Zulip (acquired by Dropbox). In each of those companies, we spent so much time on our finances and our back office — time I wish we had been spending working on the product or selling new customers.
The two insights that underpin the Pilot thesis are: (1) a lot of the finance work wants to be done in software, and if you’re smart about building the right things, you can do the work more accurately than anyone else, and (2) no one actually wants to buy accounting software — what they want is a trusted partner who will get the job done for them.
So with Pilot we basically set out to build the service we wish existed: a high-quality external finance provider that can help you with bookkeeping, tax prep, CFO services, R&D credit, you name it — so that you can focus on running your business.
This sounds hard to believe, but almost all of the things you might be worrying about as a first time founder don’t matter. I vividly remember agonizing over nights and weekends about all of these things that we thought would kill the company, and in the end they were all irrelevant.
In particular, a lot of people (my past self included) spend a ton of time worrying about what the competition is doing, rather than worry about whether customers really love what your company is doing. If you can deliver a high-quality product that solves a very hair-on-fire problem for your customers (and they’re willing to pay you for it), you’re off to a very good start. Until you’ve done that, that’s probably the task that should occupy 100% of your mindshare.
We worked all the time in our first startup, in a way that was incredibly burnout-inducing and unhealthy. Like, 12 hours a day, six days a week (Saturday was the day off). Frequently, I’d still feel behind and I’d work on Saturday as well, and that was always a terrible experience — I was horribly unproductive because I was just not in the mood to work, and then I was doubly upset: I didn’t get anything done and I wasted a Saturday I could have used to recharge.
Part of this is related to the point above: everything felt like an emergency, so everything got emergency prioritization. I wish I’d been more sober about it: “OK, is this truly an emergency? If so, we’ll settle it now. If not, it’s fine to take some time for me, and we can tackle this thing tomorrow.” I (and we) did a much better job of internalizing this sentiment at our subsequent companies.
I might feel differently if sprinting led to 10x better outcomes, but in my experience there are significant diminishing returns past a certain point of hours worked.
Working on the wrong things (or, said another way, not working on the highest-priority things). Your company will only continue to exist to the extent that you make a product that people love and want to give you money for. Anything not on the critical path to causing that to occur should not be where the founder is spending their time.
The easiest trap here is spending time on things that feel productive (or perhaps actually are productive) but aren’t high priorities — you’re fooling yourself, because you feel good about doing real work. The problem is, that work doesn’t matter, and it comes at the expense of your doing the work that does matter.
A classic example of this is the engineer-turned-“business”-founder: it’s easier and more fun to spend your time writing code. You know how to do it, you’re good at it, etc. But you should probably be delegating the engineering to someone else on your team and spending 100% of your time talking to prospective and current customers, so that you can make sure you’re actually building the right thing.
(A related note here — it’s a little shameless, but of course I have to: if you’re spending a bunch of your time on the finances, that’s not a very high-ROI use of your time either — you should just hire Pilot and let us take care of it, so you can focus on the more important stuff.)
Two things: First, know your cash position and burn rate, and have a plan for what you’re going to do to get more cash in the bank before it runs out. If your plan is, “raise more money,” make sure you have a sense of what metrics your investors will want to see before they give you more money. If your plan is, “Land some big sales deals,” have a realistic assessment of how long those deals will take, the probability that they’ll close, and make sure you have enough pipeline to cover it.
The second thing is more subjective, but: don’t spend money on things you don’t actually need. Frugality is a good and healthy thing for a startup. It’s very easy to start spending more money, and very hard to rein in spending once you’ve grown accustomed to a certain level of spend. The less you spend, the longer runway you have, the more freedom and flexibility you have.