To read the Green Pants Chronicles from the beginning, click here.
Act 1: Inception
“Call Me Back, I’ve Got the Next Idea.”
While history will not commemorate these words in the same way that it did with “Mr. Watson, come here…”, it was a seminal moment in our trajectory. We’d just killed the BuzzBox idea, and I pinged Brad back 5 minutes later with “call me back, I’ve got the next idea.”
The idea was to platform integrations between eCommerce systems and email marketing systems so that it was super simple to transform data into targeted marketing. I’d been exposed to the concept of Recency, Frequency, Monetization while in business school, commonly known as RFM modeling. I knew packaged integrations would make the hard work of integrating platforms much, much simpler. I knew that this would work.
Good Idea, Terrible Name
My working name for the idea was RFMConnex, which I’m a little horrified of today (did I really come up with a name that sucky?). We’ve taken a lot of good natured ribbing over the name Windsor Circle (which I’ll explain in a later post) but oh, man, was it better than RFMConnex.
Moving Quickly to the Next Idea
All kidding aside, this moment was critical to the journey for a non-obvious reason. After several months of work on BuzzBox, it would have been easy to just roll over and be done with it when we killed the idea. The drive to build something, however, was stronger than the idea itself, so moving from one idea to the next was important.
This played out later in our journey as well, because as we kept steering towards Product-Market-Fit, we had to keep morphing the idea, dropping what wasn’t working, and shifting towards what was working.
We didn’t realize it at the time, but the ability to let go was critical to moving forward. (Come to think of it, the writing of these Green Pants Chronicles is probably an act of letting go of the idea that has consumed me for the last 8 years).
To read the Green Pants Chronicles from the beginning, click here.
Act 1: Inception
BuzzBox – Our First Idea
The very first idea I played with had nothing to do with Windsor Circle. My thesis, in 2008-2009, was that smartphones were too expensive to gain wide adoption but that social media was taking over the world. I guess I was batting 500 on predictions. It was easier to believe then as the iPhone launched on June 29, 2007, and most of us considered ourselves lucky if we had a BlackBerry. WiFi was not ubiquitous, and 3G ruled the airwaves, and most of us had flip phones if we had anything more than a landline.
Simultaneously, pay phones were in steep decline and disappearing from the landscape, leaving in their wake millions (billions?) of dollars of hardwired infrastructure to every public place imaginable, from restaurants, to airports, to street corners. And no one was using that infrastructure!
So, the idea was to put an elegant touchscreen everywhere a payphone used to be. The user-friendly interface would be tied to social media sites, and allow users to post to Facebook or Twitter, or check email, or search for directions, in exchange for answering a few quick survey questions. This would allow brands and advertisers unparalleled first party research opportunities as demographic data based on location is well documented.
Killed by Truck Rolls
The net of it was the marketers loved the idea and VCs hated it. But the VCs didn’t hate the idea because of the cost of the hardware… we assumed that was going to be the issue. What killed the idea was the infamous “Truck Roll.” The hardware was a fixed cost, and one whose unit cost would come down with scale. However, every time a device went offline, or some drunk in a bar put her or his fist through a screen, we’d have to send a contracted service provider out to fix it. That scary, unknown, largely variable cost killed the concept. I spoke to some pretty high level RedBox management team members for perspective, but their footprint was less extensive that what I was imagining, and their units could be “hardened” in ways that didn’t limit the attractiveness of the user experience.
No More Playing Start Up
At the time, one of my most dynamic classmates from UNC Kenan-Flagler’s 2005 Full Time MBA program, Allison Philips, had joined up with Brad McGinity and me to investigate the idea. We were taking real steps to validate the concept (or invalidate it, as it turned out), but there was a point where the weight of the truck roll was looming large and we needed to make a decision about how to proceed as we were consuming valuable evening and weekend time as we were trying to figure it all out.
At the time (summer 2010), Chris Heivley and Dave Neal were underway with the Startup Factory at the American Underground, an accelerator and early stage investment fund. The call went out for applications for the next class of program participants. It would require me to quit my job, Brad to configure his second year of business school in a way that allowed him full time participation in our efforts, and Allison to move from DC to NC for at least the 12-week accelerator program. As I saw it, it’d be a good vehicle for forcing the conversation about whether or not we were serious about BuzzBox, as it would require real (and scary) life decisions.
As we explored the idea of filling out the application, the conversation had the intended consequence. We decided as a team to kill the idea, thinking that it did not have the right long term prospects to be worth the amount of sacrifice we were going to have to make. We were not ready to go from “Playing Startup” to committing, which in hindsight was a good thing.
“Call Me Back… I’ve Got the Next Idea!”
5 minutes later, I pinged Brad and said, “call me back… I’ve got the next idea!”
(Insert dramatic cliffhanger here so that you’ll come back and read the next post about how the idea that became Windsor Circle came to be!)
To read the Green Pants Chronicles from the beginning, click here.
False Bravado and Platitudes
The entrepreneurial journey is an exhilarating, terrifying, empowering, destructive and addictive experience. So often, what is written about these journeys falls into one of two categories… Platitudes and False Bravado.
The False Bravado is that annoying “we’re killing it” thing that many entrepreneurs feel trapped into saying anytime they are asked “how’s it going?” If 90% of startups fail, everyone is decidedly not “killing it.” The Platitudes are those distilled bits of wisdom that we all write to make it look like “we are killing it” or have already “killed it” and which tend to leave out situational variables, larger context, and dumb luck. I’m hoping to avoid these traps.
The Green Pants Chronicles
My hope in writing this series about my own entrepreneurial journey with Windsor Circle, which I’m dubbing “The Green Pants Chronicles” (after our team’s penchant for wearing said kelly green knickers) is to capture the experience in rough chronological order, and to do so with the Openness and Transparency that we valued so highly in our team. Some of the journey was amazing, and made us look like heroes. Some of it sucked, and at best showed that the stars don’t always align, and at worst, highlighted very human moments of not landing on the right strategy or execution soon enough to realize the rare air that Unicorns breathe. Above all things, I hope that these entries are real in their rendering of the 8 year journey.
My friend Christopher Gergen wisely counseled that I should capture the play in a series of acts (versus the time-based journal series I’d originally conceived). After some deep thought, I decided to frame it as such:
Inception – How did the formation process happen?
Launch – What did we do to actually get going?
Validation + Early Growth – How did we set and pass through early milestones?
High Growth – What did we do to pour fuel on the fire?
Decision to Pivot – When did we start seeing issues and what did we do?
Pivot – Once the decision was made, how did we push through this hard phase?
Exit – As buyers looked at Windsor Circle, what did we do to exit?
I’m giving the decision and act of pivoting their own “chapters” because getting to the decision, and then making that decision and living with it, are very different things.
Two Caveats and An Admission
I’m going to write as openly as possible, with two caveats and an admission… First, I care about the people that were involved on the journey, and I’ll craft my entries in a way that respects everyone that was involved to the best of my ability. Secondly, there are things that require my continued confidentiality, and where those obligations exist, I’ll observe them.
As for an admission: Humans remember things based on perception, and those perceptions are obscured by time. I’m all too human. I’ll actively and openly incorporate feedback from the many people involved in the journey. In some places, that might be to modify my writing if I’ve just gotten something plain wrong. In others, it might be to capture and offer a differing perspective directly in the post so that numerous views and vantage points can be considered by the reader. Either way, I’m open to feedback and will incorporate it to the best of my ability.
I’m looking forward to capturing the journey on “paper” and reliving the wildest professional experience of my life… See you out there.
When Chris Humphres, Brad McGinity, Scot Catlin and I started Windsor Circle in 2011, we had a vision of democratizing data for online retailers. We rocketed out of the gates with a pre-product, pre-revenue round, and scaled to 70+ people over the next several years, with fun team wins such as winning the prestigious Google Demo Day award, SxSW Pitch Competition, Best Place to Work in the Triangle, and an Inc. 500 Fastest Growing Company.
We took some punches, too, when we pivoted in 2017 to focus on the enterprise market, a hard strategic move that reduced our team by half, but ultimately proved successful as it led to a 2018 exit to OSG and a merger with its’ email marketing subsidiary, WhatCounts.
We were a hard-working, values-oriented, smart crew, with a penchant for Green Pants and funny mascots, and I am so proud of what this unique group of people achieved together.
All journeys eventually come to an end, and for me, it’s time for my next adventure.
Starting in September, I will join SalesPad, which is on a mission to radically transform distribution operations worldwide. In my role as Chief Revenue Officer, I’ll be working with the team to strategically and tactically scale new and existing revenue streams for the business. In doing so, I’ll be opening and staffing an RDU office, primarily in sales, account management and business development roles (so get those resumes ready… we’re looking for adventurers and buccaneers who are ready to get into the fight and have a blast as we grow the business together!).
To my beloved family, my fellow founders and cherished team, our investors and advisors, our customers and partners, to my new friends at OSG and WhatCounts, thank you. It was an amazing journey that I am immensely proud of, and I feel privileged to have been on the quest with each of you.
ps – We are going to hold a Friday Sales Meeting Grand Finale in the near future, and name the next and final not-so-very-sacred order. If you know what either of these things are, I look forward to seeing you there! Stay tuned for more info!
A few weeks ago, Windsor Circle was acquired by OSG.
There’s a tremendous amount of validation in this moment. My band of warriors started a journey seven years ago at great risk and peril. No incomes for a year or two. An idea on a napkin, that turned into a team, that turned into a beta product, that morphed into Windsor Circle, a leader in Predictive Marketing Platforms that raised $15MM in Venture Financing and won Google Demo Day to national acclaim.
We’ve been working on a fascinating problem… reducing data and data science to push button simplicity for the marketer. Over our 7 year journey, we’ve made a ton of progress and have learned a lot of lessons, the two most important of which are Product Marketing Fit, and Leverage. I’ll tackle these two subjects separately.
Product Market Fit
I often get asked about product market fit. What is it? How do you know you have it? Once you have “it” then what?
My current working definition for product market fit is “virality.” We spent a lot of time at Windsor Circle doing client satisfaction surveys, and polling for NPS scores, etc, (FWIW, NPS scores turned out to be one of the strongest correlated measurements to renewal/churn). But I think at some level the notion of product market fit is simpler. The real question is “have you built an offering (product/service/whatever) that your customers can’t wait to talk about?” I stumbled into this realization a year or two ago with two different product offerings.
The first product is Slack, the messaging app. Honestly, I’m still not 100% certain that it made our lives better at Windsor Circle. In essence, it moved internal email communications out of gmail and into a new instant messaging paradigm. While it fit our frenetic societal mentality of instantaneous and omnipresent communication, it blew away some long standing cultural adaptations around email (for example, using the email inbox as a to-do list). It created yet another place to have to look for institutional knowledge. But the fire-and-forget format of chat is alluring, and both our sales team and our engineering team had spun up instances and were absolutely in love. They professed this fascination far and wide… and people throughout our organization jumped in. As leader, I finally had to declare that our value of “Single Source of Truth” was being threatened and that we needed to go all in or get all of the way out. Fearing a complete mutiny, we switched to Slack and made clear corporate guidelines about communicating wholly in Slack for internal discourse and wholly in email for external conversations. The lesson here, despite my obvious reservations, is that Slack was on fire. Everyone was talking about it. Everyone was recommending it. And their adoption (and valuation) has gone through the roof.
The power of this product is its simplicity and the value it creates. In a nutshell, you sign up to be notified of when an airline drops its prices on certain routes. It’s as simple as that. There are no sponsored deals… no gimmicks… No clickbait. He (Scott, presumably) finds when routes go on sale, and emails it to the list when they do.
And I’ve told everybody I know about it.
We saved $2,000 when eight of us (two families of four each) to Spain last year. We’re saving similarly on a trip to Montreal this summer for 11 of us.
What’s interesting about this offering is it’s simplicity. You can’t go to the site and search for deals. It doesn’t have gizmos and widgets and data science thingys. It’s just an email a day. It shows you where the deals are. It characterizes some insights like “we think this deal will last for 24 hours”. It has a button that preloads a google flights search with that deal in it. Super, super simple. And super, super valuable.
Lessons About Product Market Fit (PMF)
First things first… if you’re creating exceptional value in any form, people will be excited about it and share the good news. If you’re not seeing that virality, you need to work on the product and how your target audience consumes it. We definitely had a phase at Windsor Circle where we scaled the sales effort on the back of an initial product market fit, and it lead to churn. We had PMF for innovators but not for the mass market and it caused us a ton of pain because we scaled into the mass market before we’d truly achieved PMF for that segment. Simply put, the innovators solved for some product deficiencies through creativity and hard work. The Mass Market wants the “easy button.” That’s not a knock on the mass market. It’s a reality check that you have to solve for PMF in phases.
What could we have interpreted better about these early signals? We were good at asking for referrals and getting quotes. We took that as the signal that we had PMF. A much better indicator would have been a high flow of inbound, unsolicited referrals. In another way of saying that, our strength in sales and marketing masked a product market fit problem that really only expressed itself once we were in the mass market and started seeing churn due to non-usage. We’ve corrected a lot of those deficiencies, but only after some harrowing times (a strategic pivot upmarket, a restructuring that cut into a team that I loved dearly, etc).
There’s a completely separate issue here, and that is having enough dollars to innovate against a hard problem long enough to get PMF. That doesn’t meant that we (I) should be let off the hook for making good strategic decisions… but there is a reality that if you’re tackling a really hard problem, it may take more time and dollars than you realized when you took that first angel round.
I’ve got a few more posts worth of thoughts about this… to be continued.
I was doing some research for a client and assembled some data about the prevalence and growth of various forms of digital usage that could be easily quantified.
Sharing some basic data here, but I found a couple of items notable.
1) Email usage is the largest, and still growing – This surprised me. I was under the impression that email was stalling out and that all of the other platforms would overtake it. This data would suggest differently. Email is still very much alive. This would confirm the feeling that a lot of us have that we’re not replacing, but augmenting the number of places where we can (or have to?) access data and interact with people.
Quantity of US-Based User Accounts (US, in Millions)
2) Instagram is growing much more rapidly than other platforms – Everyone knows that Instagram is growing rapidly, but the rate of sustained user growth is notable. Check out YoY growth here…. Instagram is projected still be at 10%+ growth as it ends 2017.
YoY Growth Rates of US-Based Accounts
I’m not going to wax philosophic here and try to interpret the trends. I just found the data interesting and thought I’d document and share.
Here are the two articles I pulled the US-based user data from:
We have a core set of values that we are pretty rabid about. We talk about our values all of the time. They’re painted on the doors. We give people awards in our Team Meetings for being the best at exemplifying the values. It’s a big deal for us.
One of the top values is about teamwork, and we spend a lot of time on it:
“Teams Survive Longer Than Individuals.”
Quarterly Team Day
To reinforce our tight company culture, we hold a quarterly Team Day, in which we do three things:
Volunteer in Childhood Education in Durham – We have made long term commitments to Crayons2Calculators, Book Harvest, and Healthy Start Academy, and every quarter we send the entire team out to humbly serve these organizations as they strive to help at risk youth in Durham.
Science of the Team – Human relationships take work, so we spend several hours on each Team Day working on a specific item, like “How to Have Difficult Conversations” or studying our Myers Briggs profiles together.
Funishment – Oh, and we like to drink beer and arm wrestle. That definitely tends to bond people together. I should know better than to challenge Henry, who is 20 years younger than me and has some pretty big guns. Look at those things. Just sayin’.
Statistical Evidence That Teams Survive Longer Than Individuals
(Credit: Gabi Huiber for the work, the text below and the graph)
Basically, you’re lost at sea and have to rank 15 items in order of importance to helping you survive the ordeal. You do it first as an individual, then in small groups of 4 people, and then you compare your individual rankings and your team rankings to the rankings of experts from the Coast Guard who theoretically would know best how to survive.
There were 61 participants grouped into 16 teams. We found that teams, even if assembled on the spot without regard to individual preferences, improved expected individual survival as measured in two ways:
Team scores — achieved by deliberation among members, according to the rules of the game — were better than the average of individual member scores for 15 of the 16 teams; the exception also had the worst team score of all.
The mean team score was better than the mean individual score and its standard deviation was also lower. This means that teams both improve the rate of survival and reduce the risk.
A summary table of scores is below. The score is the sum of the absolute difference between an individual or a team’s ranking of the 15 items and that of the experts at the US Coast Guard. Lower is better (meaning your rankings were less different from that of the experts).
A density plot of the observed scores is below. Again, lower scores are better, and note how the team scores are significantly lower than the individual scores. The “curvy” lines are the standard deviations. Basically, you are more likely to conform to a good score if you are in a group. As an individual, you are more likely to be all over the map.
In essence, working in teams both increases your performance, and your likelihood of a good performance. If you can reduce risk and increase return… man… that’s a ringer. Do more of that.
At Windsor Circle, we define team not by who is on the payroll or inside our four walls, but truly by everyone who is working to build the Center of the Retention Automation Universe.
This includes our employees, our service providers (attorneys, accountants, landlords, etc.), interns, and most certainly our investors.
We have worked hard to find investors who share our values, see the same opportunity that we do, and who could add far more than just their dollars to our efforts.
The Two Day Board Meeting… What the?
Believe it or not, we hold a two-day board meeting every other quarter. We do this because we want to unlock the collective experience and insights of a talented set of market makers, and feel that you can’t do that with an 3-hour board meeting where all you are doing is giving updates.
We do a financial call two weeks prior to the meeting to get all of the updates done, and to provide 2 weeks of time for the board to think about the data.
The board meeting itself is held onsite, spans two days, and is driven specifically by two main objectives:
Strategic Thinking – We aim to make the board meeting itself a 4 hour conversation. No board deck, no updates. We did that in the financial call… this is about collective thinking, problem solving and “strategery.”
Team Building – We make certain that our entire team is interacting with one another. Investors, associates, and management team members meet, socialize, share ideas, and solve problems together.
Speed Dating – We needed to help our investors get really deep on the opportunities for both expansion and improvement, and we wanted to expose them to a larger number of our team members, so we created a 3 hour Speed Dating experience. We had 6 stations, each staffed by 2-3 associates who took them deep on a particular part of the product or the go-to-market strategy around the product. They had 20 minutes to listen, learn, take notes, and ask questions, and 10 minutes to transition. In 3 hours, each investor had rotated through all 6 stations in an intimate setting, with the opportunity to directly observe our company and our product for all that was good (and not so good!).
Executive Dinner – We made sure that there was time for the investors to build relationships with the management team, and even kept it super healthy (salads and light fare).
Texas Hold’em Tournament – That evening, we put away the work stuff and had an all hands poker tournament. It was a ton of fun to watch a total of ~35-40 engineers and investors, marketers and management, sales and client success all squaring off in a fun game of Texas Hold ‘Em!
Executive Breakfast – This was a second opportunity to deepen executive and board level relationships. We made it optional, but everyone showed up. While the dinner the night before was more social, this was a little more structured around strategic conversation and digesting information learned during the Speed Dating sessions.
Board Meeting (No Updates… All Strategy) – This was the big test. We purposefully built no board deck, which felt a little awkward, but it was really freeing. We had data on hand that we could pop on the screen to answer certain questions, but largely, this was 4 hours of fantastic strategic conversation. The strength of our investors and advisors really shined through during this session. We had well connected, deeply educated and experienced people working side by side with us to solve problems and exploit opportunities. It was quite an experience
Investor Panel – After the board meeting and lunch, we held another all hands session, this time in the format of a town hall / panel style interaction. The investors (now all clad in Windsor Circle Green Pants!) sat up front, with the entire company in the room. We instructed our company that no question was taboo, and likewise instructed our investors to pull no punches. Openness and Transparency is a key value for Windsor Circle, so these instructions were well heeded and we had a fantastic and honest conversation as a cohesive team about what the market looked like, what opportunities and threats Windsor Circle has, and what lay ahead for us as we continue our very rapid growth as a company.
People Helping People – Opportunity to Pitch to Our Investors – We sought commitment from our investors in advance to spend time with fellow entrepreneurs in our ecosystem here in Durham. We basically created the opportunity and then got out of the way, so our peers could have direct access to our investors to pitch. We understand that this was well received by both sides!
One of the Best Board Meetings!
All of our investors reported back that this was one of the best board interactions they’d had in a long time. Here’s a quick quote from one of our investors. (Sidenote: I share this quote not to be pretentious, but rather of evidence that this calculated risk regarding the extended meeting format met with the results we’d hoped for).
Good meetings on Wed & Thurs. You are the first CEO, in my experience, to successfully pull off a separation of ops and strategy. Other CEO’s & boards have recognized the value of doing it but most of the time the strategy session devolves into ops anyway, or the strategy is pushed to the end of the meeting and some of the folks have already left.”
THREE BEST PRACTICES FOR HAVING DIFFICULT CONVERSATIONS
We wanted to arm our team with the tools necessary to have difficult conversations so that when the rigors of building a venture-backed business raised peoples’ hackles, that we’d know how to navigate hard conversations like bosses. Here’s a quick summary of what we learned:
1. Mind the Gap! (Inner Voices)
Imagine the following conversation:
CEO: “We’re going to triple the business this year!”
Employee (says out loud): “Right on! Let’s do this thing!”
Employee (inner voice says): “Good lord… how are going to do that? And my quota is going to go way up. This sucks and I’m scared!”
The gap here is palpable. If the CEO isn’t actively listening and creating opportunities to get closer to the inner voice, she or he has a real problem. The employee is rightfully showing enthusiasm and support. The CEO is hearing agreement and buy-in.
But what’s really happening here is that the employee is feeling really scared about the change that is coming.
Here’s another example, from Leah’s presentation.
It’s important to do two things here:
Mind the Gap – Just be aware. We all have that little voice inside our heads keeping a running commentary of our lives, but if there’s a gap between what’s being said aloud and what’s being thought, you could have a serious disconnect.
Create Room for Inner Voices to be Heard – In the short term, this could be providing for truly anonymous surveys or feedback mechanisms. In the long term, it should be continuing to make deep deposits into the emotional bank accounts of employees and earning their trust over time. The more genuine vulnerability and earnest attention to people’s opinions you can show, the more the gap can shrink, because people feel that they can trust you.
Remember, the bigger the gap, the bigger the problem. Work hard to listen for that inner voice.
2. Intent vs. Impact
This is a big one. Inside our own minds, we have years of context and conditioning. We are masters of our own data and experiences. So when we act, or make a statement, we do so with all of that context… in other words, we intend to communicate a certain sentiment with the words we choose, based on what we know.
But this is problematic, because the person you are communicating with may not share your context. They may not know what you know. And so the impact of what you are saying may miss the mark.
Consider the following:
Prospective hire: “So, as a startup, how profitable are you?”
CEO (enthusiastically): “We’re not profitable at all, and have no plans to be!”
Prospective hire (inner voice): “I gotta get out of here… this is a sinking ship.”
In this exchange, the prospective hire is equating profitability with job security. The CEO of the startup is excited about not being profitable, because in a high-growth, SaaS business model, if all of your other metrics are right (CAC, margin, churn, and growth rates) the last thing you want to do is slow down and try to get to profitability. The explosive growth and lack of profitability, to the CEO, is a sign of rampant success!
In this scenario, the CEO would have been better served to ask “Great question… Are you asking about the nuances of our SaaS operating metrics, or are you more concerned about our success and survivability as a firm?” This would have aligned intent before the impact of a grandiose statement scared off this prospective hire.
Remember that your intent is tied to your own contexts. Ask clarifying questions early and often when communicating so that the impact is what you wanted it to be.
3. Walk Me Down Your Ladder (of Inference)
Argyris (HBS) and Schon’s (MIT)Ladder of Inference is a construct for understanding how we as humans frame perceptions based on data that we have.
We observe data (bottom of ladder), apply reasoning based on our experiences and knowledge (middle of ladder), and then come to a conclusion (top of ladder).
We as humans evolved over millions of years to get to conclusions very quickly… and that’s healthy. Those who couldn’t quickly surmise that fast things with large teeth were likely to eat them, were removed from the gene pool. Those who could quickly arrive at this conclusion (“Danger! Run!”) passed along this hard wiring to their progeny (us!).
So… relax. It’s healthy that we quickly and automatically form conclusions. We just need to be aware of them, especially when our conclusions are causing conflict.
Using the prior example, the CEO is working from a data set that is framed by years of executive experience in SaaS. She has seen scores of examples of high growth SaaS businesses produce significant wealth by specifically not trying to achieve profitability, but instead by focusing on growth within the right SaaS metrics. The prospective hire on the other hand, may have been a part of businesses that failed because they were poorly managed, did not have access to funding, and did not achieve profitability (self sufficiency)… and as a result felt real pain when they were laid off.
In other words, these two participants are talking about the same thing, but working from different data, processing that data in different ways, and ultimately reaching different conclusions that are in conflict with one another.
What’s useful about this paradigm is that it lends itself to a phrase that can be invoked when you are in conflict or disagreement with someone.
“Hey, we’re seeing this differently. Will you walk me down your ladder and help me understand your data points and your experiences so that I can understand the conclusion you are reaching?”
I started using this phrase, “walk me down your ladder,” almost immediately in our business and to good effect. Yes, it’s a bit cheesy. Yes, it feels a bit “corporate” to say “walk me down your ladder.” But the benefit of clearly signaling that you care enough to try to understand the other person’s perspective, and that you’re willing to risk some cheesiness and business-speak to do so, is well worth it.
[Update: Since writing the initial draft of this post, I’ve had multiple Windsor Circle employees actually come tell me that they are using this technique all of the time, and not just at work. One of them shared that he and his wife were in a heated argument, and he said, “this is gonna sound dumb, but walk me down your ladder.” In a matter of minutes, they realized that they were arguing over nothing, and that by taking time to review their assumptions and underlying observations, they resolved the argument and got themselves back to a fun place instead of an angry place.]
USING THESE LESSONS AT WINDSOR CIRCLE: A CASE STUDY
We are targeting significant growth in 2015 at Windsor Circle.
We held a company wide meeting and specifically invoked these themes. We acknowledged the inner voices of our team, who have largely not been in venture-backed, high-growth start ups before and who have not seen this sort of aggressive growth in their early careers.
We did this with phrases like:
“It’s ok to be nervous about these big goals and these changes.”
“The big targets are going to mean a lot of hard work, a lot of risk, and indeed, some failure! And that can be scary.”
“Those of you on variable compensation targets, primarily sales, are concerned because your quotas will go up.”
We then literally used the words (because everyone was trained on them), “let us walk you down our ladder so that you can see what the management team and the investors see, and then we welcome you to draw whatever conclusions you’d like from that data and reasoning.” Certainly our hope was that our team would see what we see, but our goal was to align, not necessarily to convince.
Given the Windsor Circle core values of “openness and transparency,” and “facts, not claims,” we showed specific numbers to our entire team regarding the funding that we’re putting to work to make these growth goals a reality. We showed how dramatically we’re ramping the product team, and the investment in the marketing team. We showed comparison charts of how much more we’re investing in marketing spend and in which channels.
It doesn’t mean that people immediately snapped out of their own conclusions… that would be a silly expectation on our part as a management team. But by earnestly listening to inner voices, thinking about our intent and impact, and using the framing of “the ladder of inference” we shifted the conversation away from the fear of the unknown, and over to a reasonable discourse of why all of the data suggests that this is the right time, and the right team, with the right resources, to get this done.
We just ended December at 151% of our best month to date, and Q414 at 142% of our best quarter to date. We’re three weeks into January and we’ve already beat December. We’ve got a lot of wood to chop in 2015, but I think we’re headin’ in the right direction!
Thank you, Leah and Duke CE, for being a part of our journey. These are invaluable tools and we appreciate you helping us learn and leverage them.
We spent some real time thinking about how we would approach compensation as a team now that we’re post-financing. We wanted to maintain the discipline that got us to where we are, but also do a good job of executing on our values around taking care of our most important resource… our people.
Here’s where we landed (see below). This now lives on our internal wiki so that all employees can get to it and so that we can all hold ourselves accountable to it. In the same way that having clearly articulated our Windsor Circle Values (and trying to live by them), I think that this will help give us a “true north” when thinking about compensation.
Open to thoughts and comments…
Kicking the Doors Off the Hinges Every Day
Windsor Circle’s Compensation Philosophy
At Windsor Circle, we want people kicking the doors off the hinges to be here every day. Part of making that a reality is giving people a fair financial compensation package and equity ownership in an exciting, high-growth company.
But money isn’t the only thing. There are lots of places where you can make a lot of money and be miserable. We don’t like miserable people, and don’t want them on our team. We want hungry, ambitious, positive, fun, kooky people (and so far, that’s exactly who we’ve attracted into the Center of the Retention Automation Universe!).
We want people who love being here because it’s a meaningful place to be, with team members they really like, and extraordinary opportunities for personal growth.
So, our compensation philosophy will be guided by:
Fair compensation – We actively document data points externally and internally and purposefully aim for the 50th percentile of the market.
Equity ownership for everyone. This is rare. We want everyone rewarded if we exit big. This isn’t about making everyone a millionaire (that’s an incorrect expectation to set). This is about sharing in the rewards if we get the job done and have a nice exit.
Loyal Citizens, Not Mercenaries – We want employees who are passionate about “us” and our mission (as “we” are hard to replicate!). We don’t want individuals who are primarily or solely motivated by high compensation (as the highest bid is somewhat easy to replicate). We seek loyal citizens, not mercenaries.
Find Diamonds in the Rough – We’re willing to take chances on smart, unproven talent. In the first year, an inexperienced employee can expect to take a lower salary in exchange for being given significant mentoring, responsibility and experience.
Play to our stars – Our stars can expect higher compensation. Not everyone can be a star, but the smartest, hardest working, most committed team members will earn special compensation for their contributions.
We care about the whole person. We are intentional about our team’s health and wellness. We work a little harder than the average bear at orienting ourselves towards taking care of our most valuable resource… and in ways that completely “Shred the Box.” Initially:
Wellness Consultant and Personalized Plans (pending)
Massage (November 2014)
Financial Planning (pending)
Flu shots, Checkups, General Health (pending)
Corporate Fitness Challenges and Goals (pending)
Telemedicine – Every employee has access to fast, convenient medical care via phone/internet. (November 2014)
YMCA Membership – use or lose it (8x/mo) (November 2014)
Optimization, not just Balance – To be clear… we’re a venture-backed startup. We’re not out for a nice stroll every Sunday… we want to win the Superbowl. Expect to work ridiculously hard. Expect to hit heights you didn’t think possible, and to be exhilarated and exhausted as we celebrate our victories. Like an elite athlete, expect to be supported in ways that make you soar.
Building the Best Team Requires Letting Low Performers Go – Everyone’s outcome is dependent on performing well in every role, and if we can’t help an underperformer course correct, then we must have the courage to amicably part ways. When we do so, we hold the respect and integrity of the individual in the highest regard.
Quarterly Bonuses That Reinforce Relationships – Every quarter, we name a bonus for the entire team when we hit certain revenue targets. These aren’t financial rewards unto themselves. They are things that draw us closer as people. If we hit really big goals, then we additionally provide an opportunity for employees to engage their friends, family, and loved ones with a cool experience.
Insurance and Benefits – We will look to have a competitive health plan, with a focus on making employees healthy and well. We will also emphasize value to the employee. In this time of change in the healthcare environment, this means that we will leverage tax advantaged ways to deliver value, such as Health Savings Accounts. We’re a smart bunch. Doing a bit of thinking can add more value to our employees instead of taking a dumbed-down but more expensive standard plan. Retirement savings and other long term financial incentives will be considered as well.
Our Values Regarding Compensation
No Substitute for Ownership and Fair Compensation.
Foosball and free sodas are poor substitutes for fair financial compensation and ownership in an exciting, growth-oriented business. Doesn’t mean that we won’t have fun. And we’ll very likely have free soda. But we won’t confuse the fact that our employees’ well-being, and that of their families, are of paramount importance to them. The nice-to-haves are just that. Nice to have.
Play to Your Stars.
Wow your top 10%. Excellence is hard to find. Once you’ve found it, secure it.
Risk * Execution^2 = Reward.
We’re building a world class software as a service company. As a startup, we need people taking risks. The more risk one takes, the more reward is embodied in the upside. That said, we must execute against our plans to mitigate the risks, or the reward will never materialize. So, risk times execution squared will be the lens we peer through as we think about financial compensation for members of our team.