One of the best things about startups is zero bureaucracy. That said, there are a few lightweight structures that add massive value when implemented early. At the top of that list are setting a company cadence–which I'll write about in another post soon–and establishing compensation levels and bands.
Banding is the practice of setting standard ranges for salaries, bonuses, and equity by level. As you grow, the matrix will become more complex, but at the beginning, you can start with a simple grid with 4 or 5 levels. Here's an example, with illustrative numbers.
To build you own, get the best market numbers you can (investors often have this data, or Culpepper has a startup offering that's about $2,000.)
Taking the time to set bands lets you make faster compensation decisions: you simply select the relevant band, assess where the candidate should fall within the band, and make the offer. You can get Board approval to make offers within bands simplifying administration. Critically, banding will help you avoid creating compensation disparities that you'll have to rationalize later (which is painful.) I even use the bands to help employees understand where they fit and how they move up.
An evening spent creating this simple compensation framework will pay back 10x.
The venture capital-backed startup world is a bubble. People outside of it think we're risk lovers, which is reasonable since the our failure rate is so high. I think that the best entrepreneurs are risk managers.
Most people are enveloped by the emotion of risk, and it freezes them. They think about how terrible it will be if they fail, how awful every conversation with be explaining what happened.
It's better to separate the emotion from the risk. Separate the fear of consequences from the consequences themselves. I do that by asking myself "What's the worst thing that can happen?" I explore that outcome, imagine the conversations I dread, think about what would come after the worst thing. Having fully considered the downside, I almost always conclude that the worst thing isn't really that bad.
This same thinking works when I'm at the top of a steep ski slope, or at a cocktail party and have to make small talk, or when I need to have a hard conversation. All of those things feel riskier than they are.
An emotionless view of risk allows entrepreneurs to make better decisions and take bolder action.
I spoke today at Philly's best tech event, PSL's Founder Factory, using these slides. They're borderline misleading without the narrative, nonetheless...
My 17 year old daughter is a sophomore in college, studying computer science. She is one of <5% in the major who are women, and he loves the work but her male peers make her wildly uncomfortable. She shared an NPR story with me (go listen!) that got me thinking about my own start in the field.
I graduated from high school in 1981. We had a computer area in the student lounge with a couple of TRS-80s. Only a few socially awkward boys used them. That was the era when the computer field was transitioning from a relative balance in genders, including pioneering women, to male domination. (Read or listen to the NPR story for why–it is not that women aren't good at it). I had no interest in computers at that time.
I have two men to thank for changing my mind.
Between my freshman and sophomore years in college I worked as a girl friday (yes, we still had those then) at a small architectural firm called Peter Woll Architects. It was in NYC, across from the Brooklyn Bridge on Dover Street, near the Fulton Fish Market. This is what it looked like then. Drafting was all done by hand still and the firm was a very early adopter of CAD. Peter Woll gave me the job of implementing the system. The most difficult, and fun, part of the project was physically connecting the necessary pieces of technology–one might call it networking, but not in any way we'd recognize today. I spent many hours at Cables & Chips, which I am trilled to discover still exists! At that time, it was located on the second floor of a tiny building in the fish market (get the pun?). I'd walk up the steps, slippery with fish scales, and have a long conversation with someone who would hand solder whatever I needed. It usually took a few times before the component would work properly. In retrospect, I don't know if Peter figured that there was minimal risk in giving me this assignment since I wasn't earning much or whether he had some intuition that I'd be good at it. Regardless, I am deeply grateful for the opportunity and for the perspective that early experience gave me: the best way to approach new technology is to try it. I gained a level of comfort and confidence in dealing with technical unknowns which has been invaluable, particularly as a non-technical person in the field. Thank you Peter.
The second thank you goes to Dr. Jonathan Baron. In my sophomore year in college, I took a cognitive psychology course with him. Dr. Baron was doing work related to that of Daniel Kahneman and Amos Tversy, who were pioneering behavioral economics. I was fascinated by the coursework and did very well, and Dr. Baron gave me a job as a research assistant. There were Commodore 64s in his lab, and I taught myself to program, consolidating data from a very large study of Alzheimer's Disease using cassette tapes as storage medium. I loaded the data into the University's DEC VAX and taught myself SAS from a manual so I could run multivariate regression analyses. This all seemed natural at the time, but after listening to the NPR story, I realize that it is extraordinary that Dr. Baron gave me, a girl, this project.
Flash forward 30 years, and I have had a successful career in technology, the last 20 at the helms of a series tech companies, a role that is held <5% of the time by a woman. I don't think any of that would have happened without Peter Woll and Jonathan Baron. I hope that there are many men like them today, assuming that a girl or young woman can do it, and giving them the shot.
p.s. My 14 year old daughter, after reading this, said " Wow Mom, you sure did get a lot of lucky breaks in your career." Yep.
sometime around 2000 i gave up using capitals in most emails. lots of people mention it, and some people are annoyed by it. no one has ever asked me why i do it, which i find curious. regardless, i want to go on the record explaining myself.
1. it was really hard to write on early pdas (i used a series of treos.) dropping the capitalization made it a lot easier.
it turned out that realized that skipping capitals had other benefits as well.
2. i have an array of odd learning/information processing deficits. i didn't read until i was 8, but was then able to read the new york times a week later. i have a very hard time with the order of digits. and i have terrible recall of proper nouns, dates, and numbers. my short term memory is only 5 digits long. i can't tell my left from my right. i can't alphabetize, and i can't learn the multiplication table. i struggle to read any extended text in Title Caps. i literally cannot see typos, mine or others'. all of which means i have to process a lot more than most people, and i'm prone to errors. skipping the capitals to reduce complexity simplifies and reduces error while speeding my email processing. this seems like a good tradeoff.
3. i could pay homage to one of my favorite poets (e.e. cummings) who used unconventional syntax expressively (and subversively?).
4. finally, it turned out that no caps has become a trademark look. when people see no-caps text, usually in an email, they suspect it is from me. it fits my direct, casual, results-oriented approach to things.
of course, when communication is more formal–an email to a client, a bio, any other blog post–i use full capitalization. and full sentences. that's my story!
I've started and/or run too many venture capital-backed software companies, plus one ill-fated food startup.