Part 2 - The Stressful Early Days

Chapter 3 - Did We Have A Business?

After I took up the offer, the immediate next step was to have a handover with the current CEO.

We came together 4 times to go over all the details of the company, from its history, to the shareholding structure, to the strategies so far, and all administrative things.

What I appreciated most was that he was gracious about the transition. We all understood that it was only a business decision for the good of the company and nothing personal. He had brought the company to where it was and that was a huge milestone.

At this point, my job was to absorb as much information as I could in the shortest period of time. I was fighting with time because there would be a lot of decisions awaiting once I stepped back into the office in 2 weeks.

The weirdest of all? 4 weeks ago, I was in the same office, and the former CEO announced that I would be leaving the company after just a short 6 weeks. And now I’d be going back. I could not see myself in such a dramatic scene.

The colleagues weren’t exactly shocked to hear my departure back then, as later they told me there was an early discussion among the team about how long I could “hold up” in such a mess. They had the answer now, it was 6 weeks.

Day One Being Back

The first day I was back in the office, I came in early because I wanted to see the team coming in one by one to greet them.

It was honestly awkward. I disappeared one day, and now I was back as the new CEO.

I did my part to say hi and chit-chat with each of them. I also set up a little presentation as a kick off to this new era.

I addressed a few things, mainly around the decision to return, what it meant to me, and what they could expect in the next few weeks.

It didn’t go too badly. I knew that even though deep down many of them were surprised to see such a big change, they were also excited about the possibilities.

And so I told them my plan --- I couldn’t make quick decisions right away. I needed time to speak to every colleague and every paid customer to understand where we were as a business.

And of course, a lot had happened in the 4 weeks since my departure, so I had to catch up.

I would soon be making some important key decisions, including what direction we’d be heading down and what my plan was going to be with the team.

I was sure that everyone was sweating. No one wanted to be let go.

Paying Visits to Our Paid Customers

We didn’t have a lot of paid customers at that point, I vaguely remembered it was 7 or 8 in total, which was alarming for a team of 20 people.

I sent them emails, saying that I would love to visit them and chat. I introduced myself as the new CEO.

Honestly, before I even visited them, I knew that they were what the startup world called “bad customers”.

Generally, how do you know when you have bad customers? When…

  • They know nothing about technology
  • The way they use your platform is as if they’re engaging an IT vendor
  • They have unique problems and always want you to customize it for them
  • The reason they use you is because you offer a cheaper solution

I didn’t want to be biased, but I actually knew what I wanted to do. But to be polite and professional, I still met up with them to build relationships and hear them out. This way later when I fired them, it would be easier and rational.

The outcome of those conversations was exactly how I predicted. I saw no chance of success with these initial customers. They were the wrong ones for startups and SaaS companies. They were never the “early adopters”, this type of customer would consume all your resources while helping you very little in building a product.

On the contrary, we could serve this type of customers, but then we would be better off being in the agency business and charging them premium. We wouldn’t be a SaaS startup.

Sitting Down With The Team

While I was meeting our customers throughout the week, I also set up 1-1 chats with every colleague from Product, to Engineering, to Sales, to Marketing, to Operations.

Heck… that was a lot of people. I think at that point we had around 17 colleagues. A few had already been terminated before my return, and a few voluntarily resigned.

I had 2 objectives for the chats: 1) to understand more about every perspective of the company and 2) to figure out whether this person is worth keeping on the team.

I scheduled 45-min blocks with each of them and asked them to come meet me in a meeting room one by one. All of them showed their nervousness in their body language as they walked in - awkward smiles and not knowing how to say hi.

And the fact that I was calling on them one after another in a private room didn’t make it easier, I was like a detective trying to break down a mysterious criminal case.

This series of conversations was easy for me because I had interviewed at least 500+ people throughout my career. Some people wonder, “Jessica, how did you know you had done 500+?”

I knew because I kept one interview note per person on my Evernote… Couldn’t live without this app.

Okay, so from all the conversations, this was what I discovered about the team I inherited:

  • Everyone knew the vision of the company, but in a fluffy and fantasy-like way. Basically there were a lot of versions.

  • No one could show solid research, data, or evidence to support “these visions” and the “solutions” we were building. And clearly, the problem statement wasn’t clear.Whenever someone asked about our product, the team liked to describe ourselves as “we’re like [Competitor A]”. And internally, we liked to say “we’re a few features away from being [Competitor A]”. We lived to follow someone’s footsteps.

  • The team had a sales-led approach to grow, that meant cold emailing and cold calling. There was no clear marketing strategy to bring in traffic. And of course there was no funnel or conversion rate being built or tracked.

  • But cold outreach wasn’t the worst part, as it was usually the most effective early-stage channel. The product was built via a sales-led approach as well. All product features were requested by the sales team (which were requested by users or potential users). The Product team had planned a product roadmap (which was without user interviews and proper validations), but most of the features on the roadmap were deprioritized to make rooms for requests by users (aka the Sales team).

  • The sales team had the wrong intentions. They were responsible for the vanity metrics the team was tracking (e.g. total number of users), so they pushed extra hard to onboard new users. This included creating accounts for each prospective contact they reached out to. They thought this made it easier for the prospects to try our platform, when in fact no one knew how to use our platform because we helped them with everything.

  • There was one key salesperson who was really good with the people/users he brought in. However, he was very protective of his own territory and he wouldn’t let anyone, even the Product team, talk to his users. All communications must go through him. There was a lot of ego and the wrong kind of “ownership”.

  • There were two distinct cultures on the team. To generalize it, it would be a local vs international mindset. I appreciated having a diverse group of personalities and points of view on the team, but here I could notice the cultural difference was affecting how the two groups of colleagues work together. They weren’t even talking to each other. When we were an early-stage startup, we needed the team to be on the same wavelength.

  • There were a lot of internal frustrations about everything. For example, designs were piled up on Zeplin and none of them would get developed for months because Engineering was busy with the custom features the Sales team demanded. Or the company spent a ton of money on luxurious items for the office or the so called VIP users, yet the majority of the colleagues were not offered a work laptop or a decent insurance plan. The list went on.
I Opt For A Restart

It was clear to me that if we wanted to turn this around, we had to rebuild the entire company. We needed a new culture, a new product, and a refreshed team. I knew whom I wanted to keep and whom I wanted to let go, and I must do the lay off in one go in order to rebuild momentum.

I ended up removing the entire business team, including sales, marketing, and customer success. These people were on a completely different wavelength, and they were not qualified to have any contribution to the new process we were to kick off: research - hypothesis - validate.

I also let go of 1 engineer who was clearly not up to standard. Despite knowing that, no one (even the co-founders) made the decision to fire him because the company was focusing on growing… and they needed more people.

If we wanted to bounce back, we could only have “A” players.

The team was down to 8 people including myself. We had a CTO and CPO (Product). We also had 2 UI/UX designers and 3 engineers.

At that moment, it felt like I had reduced the team significantly. But later on upon reflection, I realized this was a huge mistake to keep such a large team when we had no problem to solve.

8 people were a lot of brains which meant I spent a good chunk of time managing instead of focusing on problem, solution, and product. If I were to do it again, I would have made a bold move to bring the team size down to 2-3 people including myself. I’d share more in later chapters.

Key Lessons
  • Identifying and firing bad customers can help you grow, because they’re just going to hold you back. There are many ways to identify them, but mostly you’ll know if they’re one.
  • If we had a business model with revenue running, I would have been handling the transition very differently. For an early-stage startup without product/market fit, the goal should be keeping the team small, focusing on sniffing out a problem worth solving, validating hypotheses quickly, and getting to product/market fit before money runs out.
  • It is important to know the business model and then figure out the right go-to-market strategy. We would have been okay with a sales-led strategy if we were selling an expensive software for thousands of dollars. However, our pricing plan was US$20-30/mo per user, and the average response rate was 1%. How many salespeople did we need to make a business out of it? The answer is none, because we’d be out of business already.

“Wouldn’t it be easier if you studied harder how to take the existing product on the right track instead of restarting everything?”

At first, I was leaning towards sticking to it, because I didn’t want to waste everything the team had already built. However, the fact that we had zero good customers made it clear that whatever was built was not good enough. And I realized as an entrepreneur, I had to be okay with throwing things away. Restarting could give us a fresh perspective, whereas working on the existing product would have limited ourselves.


Written with ❤️by Jessica Leo. All rights reserved.

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