Learnings from Building a Company for 10+ Years

One thing I've missed in my 10+ years of building Labforward is having enough time to reflect. I started this blog in 2018 to condense and structure a few experiences while writing. However, there was so much to do in 2019 and 2020 that blogging took a back seat. To reflect, I even tried to incorporate quarterly ‘thinking days’ - days with no deadlines and no to-dos other than thinking. But none of this worked as I expected. Some important project or emergency fire-fighting cancelled out my oh-so-well-planned reflection routines. 

After I left Labforward, it therefore probably took me a few months to digest everything I had learnt since the company was founded in 2013. After all, a lot has happened in my personal life since 2013 as well. My first son was born in 2014, followed by two more children three years apart. We bought a house and moved to another location. 

So a lot has happened, the rollercoaster ride of combining family and company building was definitely not boring.

Now that I've had a good 6 months away from the company (which is my fourth child, so to speak), I want to share a few experiences - unfiltered, largely unsorted, only briefly commented on and probably far from complete. Perhaps I'll manage to shed some light on one or two topics in more detail in subsequent articles.

1. Try to bootstrap as long as possible: Money from institutional investors (VCs, strategic investors, family offices) always comes with a higher price than you expect. The price is not only the shares you give out, but the effort you have to put into investor relations, reporting, board discussions, loss of control. Your own money, money from trusted business angels and friends might be a better choice for the first years of your company.
2. “Tue Gutes und sprich darüber.” - Do good and talk about it: Don't think that the next year you spend on research, or the next feature you release, is the big thing that's going to get you the attention of customers or partners in droves. As much as you invest in the product, you want to invest in marketing & sales from the start. Not only build your product, but also learn how to promote it.
3. Win paying customers as soon as possible, even if they’re only paying cents for your product (“Choose yourself what it’s worth, but pay what it’s worth”). The customer feedback you receive helps with the further financing of the project and motivates the whole team.
4. Embrace sales and invest in sales: Especially for people with an engineering, science or medical background, sales sometimes feels beneath their dignity. Anyone who founds a company sells every day from this point on, even if it is only the vision. Therefore I strongly advise to invest in sales even on a personal level (e.g. sales coaching). It will have an impact on your entire life, not only in the business world.
5. Business angels are better investors (mostly): When you have business angels with an entrepreneurial background and who not only invest in you because of the business case, but because they see something in you as a person, they are often better investors than institutional investors. This is especially true for the early stages as a startup.
6. Learn to say “no” frequently: Focus on your key skills and on what is really important at that particular moment. There are tons of opportunities, advice and countless opinions from nice and trustworthy people. But you simply can't process it all. Input has to be filtered instinctively: If your behavior in response to an input feels like a reaction or reflex, say "no" to the urge to act. Only if an opportunity or advice fits a strategy or bottleneck that you have developed or identified yourself, say "yes" and process the input further into an action.
7. Embrace freelancers and consultants: It’s great that founders are driven by the opportunity to build something on their own, but often they’re too much so. One thing that’s really tempting about entrepreneurship is that you can do so many things which you weren’t able to do before, because it was someone else's job or wasn’t part of your studies. Don’t think that way. Think of it as if you were being forced to do this new thing, that it's actually someone else's job who just happens not to be at your startup (yet). If you feel forced, you may be more likely to look for someone who can do the job. And from freelancers on Upwork to senior advisors in your network, there is probably someone out there who can not only do the job, but probably do it better than you ever could, without needing to be hired as a regular employee. Focus on the big issues, your key competencies, but not on all the nitty-gritty. 
8. High-quality, efficient software documentation: Especially if you are focusing on high-value products for corporate or regulated environments, you should start thinking about good and efficient software documentation as early as possible. Track what was done, why, and by whom, as early as possible, even if it seems like overhead. It will help you move much faster later on, and also has side effects, such as making it much easier for your finance team to capitalize your IP if there is proper documentation.
9. Project management: When engaging in co-development with customers, get project management right from the start. Don’t mix it up with your regular product work, but build a separate team, processes and documentation (e.g. time tracking, reporting, Statement of Work …). Of course, you need a well-defined interface to your regular product work to avoid building two products, but don't think that one or the other can be a sideline..
10. Accounting is not just for taxes: At some point (better too early than too late), accounting and financial reporting will help manage your business. Many start-ups do their accounting mainly to provide figures to the accountant and to pay VAT to the tax office on time. But when accounting is just something to be checked off a list as quickly as possible, processes are not optimized for quality. Important changes in the business model, for example, might not be reflected in the financial reporting. This leads to errors that can have very serious consequences.
11. The business purpose defines your culture, nothing else: A unique culture is the key to success and makes your startup a fun place to work. But don't substitute your business purpose with non-business goals or even ideologies. Your culture can only develop if the business develops. Diversity, sustainability and many other topics are important, no question. But they are not the core values of a company, unless the business model is directly linked to them (e.g. because you're a green-tech startup).
12. Branding is not just logo design: Strategy is an equally large or even larger part of what is later referred to as corporate identity (CI) and a good-looking logo. More than colors and shapes, branding is about analyzing the company, align on a story, and being able to tell it. It needs to be a story that every stakeholder (!) can tell and that talks about why your company exists, why it is unique and what it does.
13. Organization tops headcount: As your business, the number and size of your customers, and the number of stakeholders grows, the organizational structure needs to grow with it. As a founder, you will often hear from your team: "We need more resources," especially by junior managers. But the solution is not simply to hire more people. What your people are really saying is that they are unable to do what you ask them to do. Not necessarily because they lack resources, but because they lack experience and organization. So before you hire a bunch of people, make sure you have that experience on board and the organization set up that can support this growth. This also means investing at least as much in experienced managers as you do in junior people. And don't cling to old structures, no matter how long the team has supposedly worked well together. Growth needs new structures, from top to bottom.
14. An international team is great but also brings challenges: It's great to build an international culture and team, especially in places like Berlin. But Berlin startups, be aware of the challenges! There are cultural differences, and even if everyone speaks English, there are language and cultural barriers. To move away from the obvious challenges that foreigners face in a predominantly German team, let's look at teams that have very few German employees: Here, tasks that require German language skills and that in many cases are related to administrative tasks, are left to the few German speakers in the company - along with the bureaucracy and frustration that goes with it.
15. After the financing round is before the financing round: If you like it or not and even if your investors like it or not: Start looking for fresh money after you’ve raised seemingly enough money. (Unfortunately) it’s part of the system that only new financing rounds bring new valuations and startups who relied on VC money once, are dependent on it in the foreseeable future. So even if you feel relieved that one financing round is over and look forward to taking care about all the other things you dropped or all the other things you actually like better than fundraising… be aware that soon enough raising money will be a 100% job for you (once again).
16. Think twice before investing in social media: If it doesn't help generate sales or build a fundraising story: Don't invest any money and only a little time in social media (in B2B). A good brand and a story around it is important, but it doesn't have to be communicated on all channels every day. And beware of team members who tell you that you should invest in social media because otherwise the company will go down the drain. They probably spend (too) much time on social media themselves and have a bad feeling that the company they work for is not as visible as they are.
17. Don’t focus (too much) on competition: Especially in a largely "blue ocean" market (...but also in general): Don't spend too much time analyzing the competition. Be aware of who is out there, but focus on what makes your product and company special. Define your niche carefully and think about how to win your niche and build IP rather than worry about what the competition is doing.
18. Product = prioritization, prioritization, prioritization: Prioritization is everything when it comes to your product roadmap. The primary role and quality of your product team should be to prioritize quickly and transparently. Develop a system that involves all stakeholders-sales people, customer support team members, marketing people, and engineers-that allows you to make decisions that everyone can understand. There will be disagreements with your prioritization, but if it's transparent why you made the decision, it will be followed.
19. Methodology vs. Ideology: As a product manager or engineer, embrace your convictions, but don’t mess it up with ideology: Much too often simple methodologies are turned into religions. Take the original Agile manifesto as an example: If you look at all the tools, specialist roles, process templates and consultants - the agile industry which evolved from this original manifesto and compare it with the simple statement “Individuals and interactions over processes and tools”, you’ll get what I mean.
20. Good CEO decisions set clear market priorities: The best CEO decisions I have seen (read: not all the best CEO decisions were made by me...) prioritize a specific customer or customer segment. They clearly state that this customer must be made happy, or that market share in a customer segment must be increased. No other CEO decision is as important as a clear priority in the market.
21. Build relationships with your board, outside of the board: It's important to have a great 1o1 relationship with your board members. If you only meet them in the scheduled board meetings and the only communication you have are board meeting protocols and formal board decisions, your work with the board will either bore you to death or explode at some point. I've learned that you only understand the nuances of the individual board member's motivations, their views and their advise when you meet them 1o1 in an informal setting once in a while and have unscheduled 1o1 calls regularly. Exchanging with them individually makes it so much easier to navigate your board management work. The same actually applies to all shareholders. Of course, depending on the size of your cap table, you need to be more selective here in who you build and maintain a close relationship with.
22. Train your board by actions, don’t educate it by words: Mostly, your board will work as you want it to work when you take action (or decisively not take the actions some board member suggested). It won't work as you want it to work when you try to explain why you do certain things and why you don’t do certain things. Your board members will grow accustomed to your ways of working, but never grow accustomed when you explain too much. And if they really want something you don’t want to do, or conversely really don’t want what you do, let them take a formal board decision. And if you really feel you need to explain your thoughts and actions (or non-actions) in depths, do that in a 1o1 setting first (see 21).
23. Be (silently) critical of board advice: Often your board members are on the board not because of their knowledge of your industry, company etc. but because of their money. Therefore be cautious when they share their ideas and opinions. In addition to the board (as a controlling instrument), build an “expert committee” consisting of industry experts who don’t have a share in the company.
24. Don’t count on your initial team staying together forever: Team is the most important factor, but every team sees discussions, difficulties, arguments, changes and sometimes even worse (“War of Roses”, Game of Thrones, …). Don’t count on the group of friends you set out with, the „tribe“ you form with them, is always the best team for the job.
25. There is no blueprint for building a company: Everything you read and hear in podcasts, blog articles, textbooks, etc. about organizational structure, processes, communication, and culture - always take a step back and consider whether what you read, heard, or saw is even relevant to your business. Too often, founders jump on a topic just because it's trending on LinkedIn. With that in mind: Don't take this blog post as truth, but as an individual experience - But judge for yourself what's really relevant to you..

To close the loop, here is my final takeaway (for now): reflection beats to-dos. No matter how packed your to-do list is or how important an upcoming meeting is, if you need time to reflect, you need time to reflect. Good reflection leads to better strategy. And only if the to-do items on your list or the upcoming meeting match the (reflected& revised) strategy, it makes sense to sacrifice the time for it.

Ultimately, reflection is not tied to a routine like writing blog posts or organizing thinking days, but is something you need to do all the time. 

If any of these points help you, or if you have similar, contrasting, or complementary experiences, I'd appreciate it if you'd share and comment on this article on LinkedIn!

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