Frameworks for Using Diversity to Win

Cofounders - Iman Abuzeid Rome Portlock

by Iman Abuzeid MD, CEO & Cofounder, Incredible Health

Cofounders - Iman Abuzeid Rome Portlock

Incredible Health cofounders: Iman Abuzeid and Rome Portlock.

If you ask any VC or executive the attributes they look for in great founders, the phrase “data-driven” will be one of the first things you hear. As a CEO, we also expect our executives and team members to make data-informed decisions when possible. One of the superpowers of Silicon Valley is its penchant for data – it is one of the strongest prerequisites for action here. And although I’ve experienced first-hand some investors and operators in the tech industry who want a more diverse workforce because “it’s the right thing to do”, what we really should be saying is “it’s the data-driven thing to do”.

Because the data is crystal clear: diversity leads to stronger performance.

I learned these diversity concepts before founding Incredible Health, and applied them while building products that make Incredible Health not only the place where nurses find jobs, but also where they advance their careers. It is also one of our secrets to successfully hiring excellent tech talent for our team from other top companies.

As a tech community, to really change the extremely slow diversity trajectory we are currently on, we need to first understand what the data is telling us. And then, we need frameworks to take action.

This essay aims to provide both operators and investors with both.

Let’s start with the data:

Companies with more diverse management teams have 19% higher revenues due to innovation, and 9% higher EBIT margins, detailed in this BCG study.

McKinsey reports detail that companies in the top-quartile for gender diversity on executive teams were 21% more likely to outperform on profitability. Companies in the top-quartile for ethnic / cultural diversity on executive teams were 33% more likely to have industry-leading profitability. There’s also a huge penalty for opting out of diversity: companies in the bottom quartile for both gender and ethnic / cultural diversity were 29% less likely to achieve above-average profitability.

Harvard Business Review highlights that diverse teams make decisions 2X faster, with half the number of meetings, primarily because they are more prone to re-examine facts and keep discussions objective. Their decisions deliver 60% better results because they focus more on facts.

This study by the Kauffman Fellows dismantles the “pipeline” excuse: while diverse STEM graduate numbers continue to rise, that’s not translating to more employment in tech. In addition, using Crunchbase data the report describes white founding teams and white executive teams raising venture capital more often. However, when diverse founding teams do successfully raise, they tend to raise 60% more than white founding teams, particularly in late-stage rounds.

Diverse founding teams have higher returns when cash is returned to investors, detailed by this Kauffman Fellows report. Historically, diverse founding teams earned a 3.26X median realized multiple on IPOs and acquisitions, compared to a 2.50X realized multiple for white founding teams: a 30% increase. Ethnically diverse startup founding teams provide higher returns to investors.

There’s countless more academic papers and research on this topic; the items above are just a small sample.

How do diverse teams deliver better results (higher revenue, higher profitability, and higher returns to shareholders)? Short answer: Better and faster problem-solving.

Individuals with different backgrounds and experience see the same problem in different ways, and come up with different solutions — cognitive diversity. That increases the odds that one of those solutions will be a hit. In a fast-changing environment like the technology industry, with high stakes and intense competition to innovate, the responsiveness that diverse teams enable ensures the company is better positioned to adapt. Enriching your team with individuals of different genders, races, ages, and more is key to boosting your company’s intellectual potential and likelihood of achieving your mission. Biases can be kept in check because there’s a higher chance of questioning assumptions that hinder innovation and growth.

I experienced this first hand in product development and marketing at Incredible Health. Our team is highly diverse in age, gender, race, political views, and experience. Consider that we built our product for US-based nurses, 20% of which identify as minorities. Nurses in turn care for a diverse patient population. Therefore, when we built our first-of-its-kind Continuing Education (CE) product into Incredible Health’s apps, where nurses across the country can complete fully accredited online CE courses for free (instead of paying $240M out of pocket every year) to maintain their licenses, our team knew we’d have to provide a wide range of courses. It wasn’t enough to only provide general courses like Heart Failure for example, but also led to us including courses for specific populations like Nurse’s Role in the Opioid Epidemic, Caring for HIV/AIDS, and Delivering LGBTQ Culturally Competent Care.

At this point in the history of technology, where smartphone penetration in the US and other countries is over 80%, and businesses are adopting technology more rapidly than ever before, nearly every team is building and marketing technology products for a highly diverse population. It’s a competitive advantage to have a diverse team that reflects your user base. They can recognize user problems and needs earlier and avoid blindspots. For example, they can address the trust and safety of specific user cohorts that feel unfairly targeted, or use more culturally sensitive marketing language that is suitable for a wider range of communities. They can more easily empathize with a diverse user base and question assumptions more thoroughly, as we build and grow the next generation of products from social networks to business workflow software.

Ask yourself this memorable question the NFX partners explain to their portfolio on why diverse teams have stronger performance: “Imagine you need to lecture on a topic to a group you don’t know. In which scenario would you prepare more and deliver a better lecture – when you know the group is all of the same opinion as you and will gladly accept your view, or when you know that they have different opinions? In a company, it’s exactly the same. More diverse teams lead to more thinking, more preparation, and more points of view, which creates far better companies.”

Most importantly, 2020 has accelerated and made it crystal clear that customers expect more, and this is now table stakes. There is zero tolerance for culturally insensitive Juneteenth app filters, housing marketplaces that discriminate, community networks that enable racism, or unfettered violent rhetoric aimed at specific groups. Your customers, especially those under age 40, expect more and are saying it with their dollars. In a recent Deloitte survey of Gen Z and Millennial respondents, both groups reported that “they won’t hesitate to penalize companies whose stated and practiced values conflict with their own.”

Another competitive advantage of diverse teams: Winning the war for talent and avoiding “diversity debt”.

Investors asked me how we’ve hired a team at Incredible Health of engineers and sales reps with strong track records of accomplishment and 10+ years experience each. They also ask how we managed to successfully poach talent from Facebook and other top tech companies even before our Series A. Your company’s success is driven by the speed and quality of your talent, and the competition for tech talent in the Bay Area, and the US in general, is intense. Our huge mission, the founders’ network, rapid growth, top tier clients, and top tier investors certainly helped attract top executives and team members.

However, when beating competing job offers, and attracting a wider range of applicants, the makeup of our diverse team has been a critical competitive advantage. It’s easy to poach from Facebook when they, like much of the tech industry, consistently have terrible diversity metrics year over year. It’s easy to beat the competing offer from another top startup because their team is homogeneous whereas ours is diverse. The team they meet through our interview process signals and definitively proves that everyone is welcome at Incredible Health.

The data on the preferences of talent under age 40 is clear too. The same Deloitte survey referenced above found that the majority of millennials give a “great deal” or “fair amount” of importance to gender and ethnicity diversity when considering what companies to work for.

Teams that are slow to diversify accumulate “diversity debt”, a concept similar to “technical debt”. By choosing the quick and easy approach of building a homogenous team at first, it is increasingly more difficult to fix later because most talent prefers not to join homogenous teams.

So if you’re a team leader, how do you hire and retain a diverse team?

I’m a big fan of frameworks that can be implemented fast, in order to make rapid progress to building a heterogeneous team. Building an inclusive, diverse, and high functioning team is a long-term commitment, but here is a 4-part framework to get started:

Part 1: Make diversity and inclusion an objective / goal

Startups are chaos, particularly those that are rapidly growing. It’s the CEO and leadership team’s responsibility to drive focus, and a key tactic to do so is through a narrow set of OKRs or goals. For example, an objective is “build a team that reflects our customer base.” If it’s not an OKR, then it’s not a priority. By including diversity as an objective, that drives accountability and focus, and encourages teams to come up with creative solutions and resources to achieve the goal. This objective can also be part of the performance evaluation of hiring managers. For early-stage CEOs, you are the Chief People Officer, and the buck stops with you.

Part 2: Diversify your HR / Recruiting team ASAP

It dramatically helps to ensure those that are doing the hiring – whether it’s the founders in the early days, the hiring managers, and eventually the HR and Recruiting teams – are diverse. They have access to a more diverse network, have the knowledge of different sources of talent and can have more nuanced perspectives when evaluating talent. For example, they’re connected to Black software engineers with computer science degrees from Georgia Tech, have access to Black engineer meetups and communities in the Bay Area, or have an established track record of hiring diverse talent.

However, even if the makeup of your HR team is not diverse, then at a minimum grill them on their diverse network and diverse sourcing during the interview process. This team controls who gets through the front door, and carefully designs the interview process to reduce bias and increase hiring on merit – so don’t underestimate their critical role in hiring a diverse team. Even beyond hiring, a diverse HR team can be more empathetic or understanding of diverse employee issues that arise even after team members are hired.

Part 3: Start hiring for diversity as early as possible, and avoid diversity debt.

Diversity debt, like technical debt, occurs when you build a homogenous team first because that’s easier and faster, and then it becomes increasingly more challenging to diversify later. Studies show that diverse candidates, and talent of all backgrounds who are Gen Z and Millenials, are less likely to join or consider your company because the existing team is homogenous. Therefore, the best time to build a diverse team is from the very beginning, because it becomes increasingly more challenging as you grow. As described earlier, it’s a competitive advantage to have a diverse team, especially a diverse executive team, because it begets a consistently heterogeneous team and wider applicant pool for the rest of your company’s history. So start as soon as possible.

Part 4: Make sure your entire team believes they belong.

Creating a work environment where diverse teams can thrive is critical to attracting and retaining a diverse workforce. For example, construct and run meetings in a way where everyone is heard. Set clear agendas. Circulate written documentation and ideas beforehand. Reward individuals’ “obligation to dissent” so teams arrive at the best ideas for customers and company goals, instead of the best ideas for egos or seniority.

Generous family leave for parents with newborns, legal support for immigrant work visas, and flexible work schedules, enables a wider range of team members to excel at work too. Some of these policies and norms are not financially feasible when it’s just 2 or 3 founders working away in an apartment in the earliest days. However, once there’s revenue or funding, these norms should be re-examined, implemented, or modified to enable a diverse team to succeed.

The elephant in the room: Fundraising and Diversity

At this point in history, the abysmal statistics for funding women and people of color are well known. For example, less than 1% of venture capital goes to black founders, despite the ample evidence that diverse teams drive business results. So if you’re an investor or operator of any background navigating this structural bias in the technology industry, how do you think about this topic and make a positive impact to reduce bias?

I’m not a professional investor, I’ve only done a few angel investments personally and as a Sequoia Scout. However, I’ve raised over $17 million in capital from top tier investors in Silicon Valley for Incredible Health, across our seed and Series A rounds in the last couple years, so I’ll offer some nuanced perspectives:

If you are a female or PoC founder, then start with my detailed guide for how founders can successfully raise from top tier investors. The one additional tip I would add for any founder in these specific cohorts is psychological: You know the statistics show structural bias exists. Take a moment to acknowledge it, accept it, and then rapidly move on because dwelling on it will only cost you time and energy that’s already in short supply. Assertiveness, confidence and ambition are critical to a successful fundraising process. Your counterparts (and competition!) in other cohorts are not wasting a single ounce of mindshare on bias, and neither should you.

Also, your target investor list should have clear criteria to help you succeed in the long term. One additional criterion can be focusing on investors that have already funded diverse teams, highlighted in NFX’s Signal product.

For the tech investing community at large, it’s helpful to highlight some specific examples of investors who have made rapid progress in diversity, as evidenced by the companies in their portfolios, and their track records of returns. Seeing real-world examples and KPIs is a key way I’ve understood what’s possible and what the bar is as an operator, so a similar technique can be used to see what’s possible in investing in diverse teams.

Please note this is a non-exhaustive list, and stems from my experience getting to know these investors, some of whom are Incredible Health investors, or investors I got to know well while building our company:

Jeff Jordan (Andreessen Horowitz)

Let’s start with a titan of the venture capital industry: Since taking OpenTable public as CEO, Jeff is frequently on the Forbes Midas List, and has driven massive returns for a16z. Jeff is a board member at Accolade, Airbnb, Incredible Health, Instacart, Lime, Lookout, OfferUp, Pinterest and Wonderschool. Notably, he led a16z’s investment in our company Incredible Health, Wonderschool (Chris Bennett), and Cadre (Ryan Williams) – all of which have black CEOs, and has historically invested in black founders, LGBT, women, and more. Jeff met me through NFX in 2017, and led our Series A in 2019.

I asked him recently what’s his secret to investing without bias, and what enables him to successfully do it whereas his industry peers lag behind. His answer: “When I’m making a new investment, I’m looking for the elusive founder/product fit – the idea that this founder is the only one on earth that can solve this specific problem. Problems are as diverse as people – so it would be a pretty limited viewpoint to think that only one type of person or background can solve all the world’s problems. I have learned that I never know anything about a person until I spend enough time to really know them. Once I invest the time, skin color, preference and all the rest become invisible. In investing, I think this is my key competitive advantage — true knowledge of people. I’m also looking for entrepreneurs who can overcome obstacles to will their idea into existence. Many diverse founders have already (at least partially) proved their ability to do this by getting all the way into the VC pitch room.”

Bill Gurley (Benchmark)

Bill is another titan veteran of venture capital, consistently on the Forbes Midas List, and drives huge returns for his LPs. Zillow, Uber, Stitch Fix, Nextdoor, Solv, Marco Polo, Instawork, and Good Eggs are some of the companies he’s led investments in. Notably, Stitch Fix (Katrina Lake), Nextdoor (Sarah Friar), Solv (Heather Fernandez), Marco Polo (Vlada Bortnik), and a company in stealth (Meredith Harris) have female CEOs.

I asked Bill how he’s been able to invest in female or a diverse set of founders, whereas his industry peers have lagged behind. His answer: “While I am thrilled to have the opportunity to work with such a diverse set of founders and CEOs, I didn’t arrive at this outcome as a result of a direct objective. So in retrospect, I would suggest that ‘absence of bias’ is the likely key. Gender and race are not part of how I find or evaluate founders or companies, so I end up with diversity in my portfolio.”

James Currier (NFX)

James has built 4 companies, had multiple exits, and he’s one of Silicon Valley’s leading experts in growth, network effects, and marketplaces. NFX also has a diverse portfolio that includes Incredible Health. The role of a seed investor like James in breaking the bias that pervades this industry cannot be underestimated. The NFX partners were our earliest investors. James mentored and coached me in skills like fundraising and network effects, and most importantly shared his extensive network of trust that he built over 20 years. His role in my professional development was critical to our success to date. Experienced seed investors and former CEOs like the NFX partners who take the time to mentor and teach diverse founders are crucial, not only to impart knowledge and skills, but also because they are important and trusted feeders to larger funds in the venture ecosystem.

James’ take on investing in diverse founders: “First, I have a clear focus and checklist for what I look for in founders that can be found across all demographics and are important in early-stage entrepreneurs. They include things like character, speed, thinking in a data-driven way, and having something to prove. Second, I acknowledge that I do have biases, so I’ve built counter biases in favor of diverse founders into my thinking, our processes and our software. For example, if it’s a Black founder, that triggers our counter bias methodology to make sure we haven’t missed something. My Partners – and everyone at NFX – participates in this way of thinking.”

Jess Lee (Sequoia Capital)

Jess Lee has been a partner at Sequoia for the last 3 years, and has been a tech operator for over a decade. She’s also backed female founders at Sequoia, such as Katherine Ryder at Maven and Amira Yahyaoui at Mos. Jess found me through Female Founder Office Hours, organized by a non-profit she co-founded: All Raise. All Raise has a huge mission, but what many miss is that it has done wonders for diversifying the deal flow of the investors involved, and helped them find phenomenal companies.

Jess’ secret to consistently investing in female or diverse founders is that she was a female founder herself and experienced investor bias firsthand. She built a startup targeted at women (fashion app Polyvore), pitched to many rooms of all-male VCs, and had to resort to theatrics to convince people that women’s fashion was a worthy category. That gave her a positive bias for underdogs and fighters. In her own words, “Startups are an irrational endeavor because the odds are so against you. The kind of person who keeps fighting, despite the system being somewhat rigged, is exactly who I want to back.”

James Joaquin (Obvious Ventures)

James has been a CEO/founder of 7 companies, helping lead them to IPO (Xoom) or successful acquisitions by Apple, Kodak and AOL. As a co-founder of Obvious, he invested in Miyoko’s Creamery (Miyoko Schinner) and in Beyond Meat, one of the most successful IPOs in 2019. James met me through NFX in 2017 and led Incredible Health’s seed round and joined our board. His team has explicitly called out their continued desire to hire diverse investors, and fund diverse founders: “World positive, leading companies are diverse companies.” James pioneered the World Positive term sheet, and required we send him our mission and values before wiring our seed capital.

I asked what’s his secret to investing in diverse founders. His response: “Investing without bias is a human impossibility since we all carry unconscious biases around with us, so that’s even more reason to build a methodology to counter it. First, remember the data – diverse teams deliver better business outcomes. Second, celebrate the founders’ distance traveled. A founder who has faced more adversity in life is better prepared to tackle the myriad challenges of a startup versus a founder of privilege. Third, founder-market fit matters; have they ‘worn the shoes’ of their customers. Leadership teams should match the diverse set of consumers they serve.”

Charles Hudson (Precursor Ventures)

Charles is one of the OG diverse investors, investing in diverse founders long before it was required. His portfolio closely resembles the ratio of diversity in the US population. His notable early-stage companies with female or diverse founders include Finix (Richie Serna), Carrot Fertility (Tammy Sun), Noyo (Shannon Gogin), Runa (Courtney McColgan), Fuzzy (Zubin Bhettay), Squad (Isa Watson), and Incredible Health (Iman Abuzeid). “The fact that my investing team is black, and we have an established track record of funding female, black, white, and/or latinx founders, attracts even more diverse founders to us every week.”

How do you make rapid diversity progress when investing?

If you’re an investor reading about the investors above, and you have a largely homogenous portfolio, or struggling with low returns, what are you waiting for? If you have a couple wins under your belt, and are looking for the next set, what are you waiting for? The prominent examples above show the mindset and execution to fund diverse founders is not only doable, but it’s part of the data-driven approach to higher returns. Here’s a 3-part framework to put the data into action:

Part 1: Make diversity a priority, an OKR, and measure it.

The next 20 years in tech are unlikely to look like the last 20 years – your returns depend on finding diverse founders, founders with highly unique perspectives and insights. In the same way you rapidly ramped up your understanding and network in cryptocurrencies, fintech, SaaS and other “hot” opportunity areas, you can rapidly ramp on diversity too. For example, track and modify the diversity of the founders in your deal flow, your team, and your referral sources to result in a growing number of female, black or latinx CEOs in your portfolio.

Part 2: Build a bigger tent to fix your sourcing, and help your CEOs.

One tactic that every investor cited above has is an expansive national network that is diverse – specifically scouts and “referrers”, executives, and subject matter experts – a huge tent. This helps CEOs in their portfolio hire diverse team members, but also heavily expands and diversifies their deal flow. For example, I met Mike Smith, President and COO of Stitch Fix through Jeff Jordan, and Mike subsequently referred excellent talent to me.

Expand your network so at a minimum, you’re connected to the major hubs and connectors who already have an established network of diverse founders. BLCKVC is one place to start, another is investors that have already funded diverse teams, highlighted in NFX’s Signal product.

From 2020 onwards, you’re expected to support your portfolio companies with diversity, so it’s best to rapidly make progress inside your VC firm too. Hiring diverse investors is a key shortcut to building a bigger tent too.

Part 3: Remove or counter the bias in your diligence process.

I’ve gone through the full diligence process of the best of the best Series A funds in Silicon Valley. It felt unbiased, highly process-oriented, and rigorous. It included evaluating our vision, market, product, team, founder-market fit, speaking to customers, understanding the founder’s story and traits that enabled success in the past and will propel the future, business metrics, backdoor references and more. Heuristics like “two white guys from Stanford” are sloppy and haphazard, and have the potential to continue hindering future returns if companies are evaluated in this unsystematic way.

We are coming to terms with what we have or have not done right in tech in relation to diversity. Regardless of how we all got here, today is our new starting line. We all want to win. Data is one way Silicon Valley has won this far, and it’s the way we can keep winning. The data is clear – diverse teams win.

Let’s lead into the future with data, and make diversity more than just a statement we proclaim.

Let’s make it an action we take.

Thank you to Jason Brown, Chirag Chotalia, Mark Munro, Rome Portlock and Christen O’Brien for reviewing this essay.

For more information about Incredible Health, visit Follow Iman on Twitter @ImanAbuzeid and Incredible Health at @JoinIncredible.

34 Questions to Recruit World-Class Talent in the Remote Era

34 Interview Questions - OG

by James Currier (@JamesCurrier). James is a Managing Partner at NFX, a seed-stage venture firm headquartered in San Francisco.

34 Interview Questions - Header

For the last century, we’ve been learning about the best ways to hire and work in an office setting. Now the clock has reset and we’re racing to find the new best practices for the remote era. This sudden cultural shift to remote work presents an opportunity for startups. Startups that adapt will have the advantage and they will become magnets for the best talent.

Like with technology shifts such as web-to-mobile, rapid cultural shifts can also provide a ledge on which to build iconic companies.

Remote Working - Google Trends

Long-term increase in search interest for “remote jobs”. Source: Google Trends

Adapting to remote work requires relearning how to recruit the best talent. There are two sides to this. Half the equation is about learning to discern talent within the structures of a remote hiring process: figuring out which qualities to look for and what questions to ask. The other half is relearning how to attract the right people.

Today we’ll walk you through what we’ve learned so far about attracting and discerning remote talent, including a list of remote interview questions that we’ve collected through surveying top Founders. Some of it is common sense, and some of it is counterintuitive.


Top Interview Questions To Discern Remote Talent

We surveyed 100s of top Founders to get their #1 favorite interview question based on the qualities we’ve identified as most important for a remote hire. Below are the 34 best to help you build your remote interview process.

A short list of qualities and characteristics to particularly look for in a remote job candidate would include speed, initiative, adaptability, and intrinsic motivation. And of course, you should be asking questions to figure out if they can help you attract more remote talent.

Remote Interview Questions - Faded List



1. Is it more important to move fast and get it done, or to take your time and do it right?
2. Can you describe an example of when you helped your team move faster?
3. Describe a time when the organization you were working for went too fast and it was a problem. How did you feel about this? (They should say they loved going fast even when things went wrong.)
4. How do you prioritize building processes and systems versus shipping against your goals and deadlines?


5. Describe a time when you over-delivered against what was expected of you. Why did you want it so badly?
6. What are some projects you’ve done in the past that you came up with yourself? If it didn’t get implemented, why could you not convince your boss at the time?
7. What do you consider to be your best idea at work, and what obstacles did you overcome to make it happen?
8. Three years from now, what new things will you have learned, who do you want to have added to your network? How will this job help you achieve this?
9. If you were to get this role, what would be your biggest challenge and how would you approach it?


10. We are resource-constrained and things are really ambiguous here, is that what you want for yourself?
11. Describe a time when your boss changed plans really quickly. How did that make you feel?
12. Describe a time when things were changing really quickly. What was the environment like for you? (Notice if they use negative words or positive words.)
13. Describe a time when you had to change your plans suddenly. How did you communicate this with other people?
14. Who’s the most difficult person you’ve worked with?

Intrinsic Motivation:

15. Tell me about a time when you loved your work. What did you enjoy about it?
16. Describe a time when you became consumed with what you were working on. How did you deal with it?
17. Describe something you created, either in work or outside of work, that you are proud of.
18. When was the last time you were working on something and looked up at the clock only to be shocked at how much time had passed? What were you working on, and why were you so absorbed by it?
19. Tell me about a niche product or something for your hobbies or passions that you’re extremely opinionated about and why.
20. What’s the most recent thing you learned about yourself at work? How did you learn it? Why?

Job Longevity:

21. Walk me through your last few jobs. What did you learn and why did you leave each?
22. What do you want out of your next job that you aren’t getting now?
23. How long can you see yourself being here? What’s next for you?

Past Performance:

24. What was the highest performing team you’ve ever worked on? Why was it so high performing? What was your role?
25. What is your superpower? What is the one thing you do better than most others in your profession?
26. What do your coworkers tend to respect and admire most about your work?
27. What do you consider your natural gifts, and what are the things you’ve worked hardest to get good at?
28. Who have you learned the most from in your career? What did you learn?
29. How do you push the boundaries and limits of what you do?
30. What advice would you give to someone starting new in your profession? What are the best things to spend time learning and doing, and what’s a waste of time?
31. What are you most proud of in your career so far?

Talent Magnetism:

32. If we hired you today, who would immediately want to join us?
33. Can you name a time when you recruited someone to a company you were working on?
34. Who are the three most exceptional people you’ve ever worked with and what made them so exceptional? Do you think you could convince them to join you here if we hired you?


Adjust Your Hiring Process

Beyond the interview questions, more of your hiring process needs to adjust for a world of more remote.

There’s an opportunity there. The current systems for hiring aren’t that great, so now is a chance for us to improve how we hire overall.

One advantage of remote hiring is access to volume. The number of people you can interview remotely is more than what you could do in person. In theory, this means you’ll have a greater chance to meet the perfect candidate.

Secondly, doing interviews remotely is also going to allow us to digitize and coordinate questions between interviews more easily. It’s a good opportunity to overhaul old analog hiring processes. Redundancies between interviews can be lessened and wait times eliminated. Inconsistencies between different interviewers can be removed. Remote gives us the opportunity to be more systematic and coordinated.

Third, there are biases that may not come into place remotely, which may help us to make better decisions in who we hire.

Fourth, some people who would be poor office mates may be great remote workers and vice versa. Remote work will change who we consider the top performers.

Fifth, vetting becomes more important. References are even more critical if you’re never going to meet the people you hire in person.

Remote candidates should also expect the vetting process to be longer and more rigorous and should be willing to put in more work during the interview process — even potentially working with your company in a “try before you buy” scenario.


How To Attract The Top Remote Talent

Adjusting your hiring process for remote includes changing how you make your company an attractive destination for the best talent. Showing people that you have the best place to work is no longer about having a fancy office like the Googleplex with 3-star chefs and nap pods. Now you have to compete by offering people:

  1. The chance to do great work.
  2. Great compensation for that work.
  3. Access to a strong culture and community of coworkers that includes remote.

Having a sense of community and belonging is a big and underrated reason why people work where they do. “Belonging” is not as tangible and obvious as compensation, so belonging is often overlooked. But the unseen hand of network force is just as powerful in our work lives as it is anywhere else. The people you work with are a big part of your life.

Step 1. Know Thyself and Really Build Culture

Building a strong remote culture doesn’t happen organically as it might in an office with daily, unplanned interactions. Remote work means you have to put more effort into fostering a culture.

The NFX Culture Scorecard


What stage is your startup, and how do you expect it to evolve over time?

Remote Startup - Chart

Self-knowledge here is important. Be really clear where you land on this grid, both now and in the future. Are you building a remote culture and community from scratch, or are you transferring a culture you built in an office online? Will you become more or less remote as your company grows? Having a clear answer now will allow you to build for the future.

Some Founders are adamant about being fully remote. Some want to be fully in-office. It’s safe to say we are going to see more fully and partially remote companies than we did before, and there are going to be successful companies in every box on the grid above. Success will depend on implementing the right culture and processes for the box you’re in.

One thing to consider is, how iterative and creative does your product need to be? Highly creative products have typically been done better in person. If you’re changing significant business and product attributes more than once or twice a day — language, onboarding flows, your go-to-market, channels, product features, etc. — it’s possible that being in the same room still produces the most iteration speed and the least friction.

For instance, can you build a consumer-facing social product with a fully remote team? Yes, of course. Can it be done as quickly or as well as your competitors if they are in person? The jury’s out.

What type of company you are or what stage you’re at should come first in deciding your long-term mixture of remote work.

Step 2. Build A Performance Culture For Remote

We wrote the Company Culture Manual as a guide to building culture in person. While many of the same principles apply in a remote context, there are adjustments that need to be made.

Download the Culture Manual

Remote work is a skill in itself. People who make good office workers may not necessarily be the best remote workers. Some of us need to be in an office to perform at our best. We perform better with an audience. We need to know that others are right there watching what we do. We like periodic eye contact and coaching.

Some other personalities do better when remote. More independent work, fewer interruptions, not as much social time.

Thus, a big part of building a strong remote culture is therefore to discern the right talent for remote vs in office. Hiring people with the right qualities and motivations to succeed remotely will seed the culture.

The other part of creating a good remote culture is to iterate through elements to see what sticks. We’ve seen some positive results simply by taking synchronous experiences from office environments and moving them to remote — experiences like birthday celebrations, happy hours, yoga, meditations, stand-ups, all hands, etc. They have been adapted for remote and they work to some extent.

Asynchronous experiences take it to the next level, with nicknames, employee awards, competitions, trivia games, meme sharing, volunteer work on shared values, donation programs, structured mentoring, etc. As time goes on, we expect new types of remote-only rituals and activities to develop and stick. Create them, test them. They are important. [You can download our comprehensive list of company rituals here.]

There are companies that have been 100% remote for many years. Some of the most discussed ones are Automattic, GitHub, 37Signals, InVision, Zapier, and TopTal. Automattic, for instance, started as an open-source project, with people remote all over the world contributing to the code base. They slowly picked up their best contributors as full-time employees. These were folks who were attracted to remote work from the beginning and it created a unique company DNA.

If you can show prospective employees that you’re building a strong remote culture, it will be a magnet for top talent who are looking for companies that have adapted for the future.


Staying World Class In The Remote Era

Founders should take care that they don’t lose the energy and camaraderie that in-person work creates in the transition to remote. Remote work may be lifestyle-friendly, but in the startup world competition is fierce. You have to take care to retain a competitive level of energy and camaraderie to operate, whether remote or not.

In the end, winning startups are made of people who are 100% switched on 100% of the time and operating at a world-class level.

If remote work is part of the playbook for operating at that level, then it makes sense. But if it’s implemented for some other reason, then it may make it harder for you to compete. Choose carefully in deciding what makes sense for your company. If you do embrace remote for the long term, put your full effort into adapting your hiring practices and culture building to succeed as a remote or partially remote organization.

The percentage of work that is done remotely will certainly increase. Companies that thrive in the new era will learn to turn the challenges of remote work and remote hiring into an advantage.

Thank you to the fantastic group of Founders who participated in the creation of this essay.

Connect with James Currier

How Contrarians Think: The Early Days of Square, Yelp & PayPal with Keith Rabois

How Contrarians Think - 1%

by James Currier (@JamesCurrier). James is a Managing Partner at NFX, a seed-stage venture firm headquartered in San Francisco.

How Contrarians Think - 1%

Silicon Valley loves patterns and playbooks for executing on market disruptions. Take a great startup, break down its wins into a series of actions and reactions, and then follow that blueprint. Simple, right?

What rarely comes to light is that the great Founders do not study rules so they can follow them. They master the rules so they can break them. Underlying their vision are mental models that get at the key question: Which patterns do you violate, and why?

As a Founder, the clarity of your thinking behind that question is defining because, as my friend Keith Rabois puts it, “If you’re trying to reinvent everything, that probably means you’re not really successfully reimagining anything.”

Your highest leverage is studying the rules as a starting point, but spending much more time on the mental models — the psychology — behind rule deviation.

This essay and podcast is an examination of the rule deviation behind some of technology’s greatest startup feats — PayPal, Square, Yelp, and even touching on Apple, Tesla and SpaceX. Keith has been instrumental as an early team member in many of these companies. He’s had a storied career in Silicon Valley, and he now is a partner at Founders Fund.

Whether you agree or disagree with Keith’s conclusions is not the point. The point is — as always — creating something of true significance starts with seeing what others do not.

Let’s jump in.


1 ) Being a contrarian is easy. The challenge is being a contrarian and being right.

  • The basic principle of a contrarian is the ability to think for yourself, on any topic, and being able to derive a set of views independent of what other people around you think.
  • That’s very difficult to do because everybody is mainly influenced by the 5 people you spend the most time with.
  • For Founders, it’s a whole lot easier to build a business when you see the world differently at first. That gives you time to develop it, build traction and momentum, and accumulate advantage… before the rest of the world realizes that you’re on the right track.
  • Peter Thiel wrote about this in Zero to One, where he talks about secrets. What secrets does the Founder have or team have, that are insights about the world that everybody else thinks are wrong, but prove to be accurate?
  • The challenge of being a contrarian is not in being contrarian. The real challenge is the Venn diagram overlap of being right and different.
  • Reid Hoffman has a great quote about this: ”It’s actually pretty easy to be a contrarian. It’s hard to be contrarian and right.” Jeff Bezos has said the same thing.
  • Personally speaking, I am an anti-FOMO person. I prefer JOMO — I run my life around the joy of missing out. The more things I’ve missed, the happier I am.
  • I grew up in an anti-war household that loved George McGovern. Then I went to Stanford, which was incredibly leftist when I was there — borderline Socialist or Communist — and I survived that. Then I went to law school, which is full of left-wing professors. Now I am a conversative in Silicon Valley. So maybe to some extent, I might go crazy if I was sitting around with fellow conservatives all day!


NFX Frameworks for Startup Ideas


2. Only after you’ve mastered the rules do you get to violate them.

  • The art in most fields is understanding the rule precisely, and then knowing when to deviate. There’s truth to that in Silicon Valley too, that deviating from rules doesn’t make much sense, per se. It’s knowing why you’re deviating from the rule.
  • I remember the first time I learned this. I was a kind of annoying high school kid, and I remember sitting in English class and reading some of these great works of literature and noticing that some of the best authors of all time would occasionally violate grammar rules. And I’d ask my teacher: “Why does my paper get marked up when I do this, but so-and-so famous author gets away with it?” And the correct response by my English teacher was: “Well, when you master all the rules you get to violate them.”
  • If you follow the rule book, you’re not going to create an iconic company from scratch. There is no rule book that tells you how to build the next SpaceX or Tesla by definition. And so you need to know what rules you’re going to change.
  • That’s why I don’t like the phrase “best practices.” Best practices just lead you to the replication of something else. You can borrow best practices, but you need to know where you’re intentionally not following “best practices” or you’ll just be in the middle of the Bell Curve, which is not the goal. You need to be at the extreme one percent. So you want to consciously violate some of the rules, but have a very intentional strategy for doing it.


3. Case Study: How Apple breaks the rules

  1. It’s a closed platform. For 20 years, most people have argued you don’t build a closed platform.
  2. It’s a secretive company; they don’t let their different teams talk to each other inside the company.
  3. They don’t actually use metrics for the most part to measure themselves.That’s all very unconventional. All three of those things would violate most Silicon Valley norms, but they’re indispensable to Apple’s success. There’s a reason why they are the most valuable technology company today.


4. At PayPal, we didn’t think we were misfits. We just knew something the world didn’t appreciate yet.

  • There have definitely been times at many companies I’ve been involved in when the world thought we were crazy.
  • For example, Red Herring magazine, which at the time was the centerpiece of Silicon Valley technology consensus opinion, ran this cover story on PayPal called “Earth to PayPal.” Peter (Thiel) never forgot this. When we celebrated our IPO, he held up the cover. When we celebrated our acquisition by eBay, he gave another speech holding up the cover. So, we definitely were considered to be weird, odd misfits at the time.
  • I don’t think on the inside we thought we were misfits. Our companies were making, for the most part, quite wise decisions. Whether the world appreciated it or not… that wasn’t the key criteria for us.


The Hidden Patterns of Great Startup Ideas


5. How “The PayPal Mafia” broke the rules — and won.

  1. The number one thing is to really credit Peter and Max for their recruiting. They had a philosophy of finding the right people and ultimately sourced a huge fraction of the PayPal network through their personal networks. Peter, through his connections at Stanford, and Max mostly hired engineers out of his high school experience in Chicago or from the University of Illinois. They identified people with high potential at scale and mixed everybody together.
  2. Once we were in the building, there was a set of management philosophies that were very different at the time, which may have enabled us to be successful with this company and then also subsequently. For example, we didn’t really believe in general managers. Peter was adamant that we were not going to hire people whose skill in life was managing. We were going to promote the best person in each discipline to lead that discipline. So for example, the best engineer would become VP of Engineering, the best designer would head the Design team, the best product person would lead the Product team, the best finance person would be CFO, and that led to a building of craft and gave a meritocratic feel. Everybody knew that their boss was actually pretty damn good at what he or she did. So I think that was pretty fundamental.
  3. PayPal was a hard business. It was very challenging. There were a lot of obstacles, a lot of people and enemies that didn’t really like us, ranging from Visa, MasterCard, to federal and state governments at different times, eBay, et cetera. So it was sort of a trial by fire situation. You definitely bond with people in that kind of environment, and you get to see who’s really good under pressure and stress and who actually doesn’t thrive under those circumstances. So, after PayPal, when people subsequently went to start their own companies, I think a lot of us already knew how each person would do as a Founder. Peter and I talk about it all the time… being a Founder is like chewing glass. It’s not particularly fun, it’s very painful, it requires a lot of self-actualization and initiative. And I think our time at PayPal gave us pretty good insight into who was likely to thrive in that environment. And that’s why I think some of my colleagues’ companies did really well.
  4. When we all exited PayPal and were investing in or starting new things in 2003, 2004, 2005, most people didn’t think that there was another wave of consumer innovation that was likely to be successful. We happened to believe there would be, which is why we started all these companies, funded each other’s companies, etc. History will record that as being right, but it wasn’t obvious at the time.


6. Counterintuitive KPIs in the early days of Yelp, PayPal, and Square.

  • It was probably the second board meeting we had since I joined the board of Yelp. I remember Jeremy Stoppelman was finishing his presentation and he basically gave us this vision that Yelp was really building this viral social product, which not everybody appreciated at the time. I looked across the table and said, “Okay, well, if you’re building a social product, what’s the key metric that’ll tell you whether you’re right or wrong?” And he looked up and down the table and said, “It’s the number of unique, one-on-one personal messages from one member to another.” And personally, at the time, I thought the answer was ridiculous. But very quickly thereafter, certainly within three to six months, I realized he was actually right that that was the key predictor for whether we were building a true community. It was extremely counterintuitive at the time.
  • I’ve given you the PayPal example too. Nobody really believed that eBay was a target market for PayPal. But then David Sacks noticed that there were 54 sellers on eBay who had hand-typed into their listings: “Please pay me through PayPal.” It was a very small number obviously, and the first reaction of the PayPal executive team was, “Oh my God. Why are these people using PayPal? We should get rid of it because that’s not what we’re supposed to be doing.” But then David came into the office the next day and said the opposite: “A-ha! I think I found our market.” So we created a PayPal logo that they could insert, as opposed to type, and then we created an automated way to insert the logo because these sellers had lots of listings. It basically became both the market for the company to focus on, as well as the guiding light for the product strategy for two years.
  • Back when I joined Square, we were just launching and we’d shipped about 10,000 or 20,000 Squares into the world, and we started to grow. Here’s what happened:
    • We weren’t doing any marketing; we didn’t have money to do marketing. But I remember Jack pointing to his computer the second week after we shipped the Squares, and noticing that day by day, we were adding more users per day, growing a little bit each day. And he asked me, “Why is this happening?” And I paused because under the standard set of rules it really shouldn’t have been happening. We weren’t doing anything to create this growth.
    • So I thought about it for a few minutes and I formulated a hypothesis. And it was really only a hypothesis given the constraints. I thought, “A-ha! Maybe this is a function of people seeing Squares in the real world, seeing the actual device, and some fraction of them that see it, sign up.”
    • So once you have a hypothesis, then the next question is, “Well, how do you validate that? How do you test it?” If true, there should be a ratio for every new Square we shipped, and every new customer, and every transaction in the rate of growth. Turns out there was a perfect relationship, it’s exactly 1%. So for 1% of all transactions on let’s say day zero, we have 1% of signups the next day, new signups, and they just were perfectly consistent. This is amazing. We now have an actual viral loop in the real world. We had this observability. We’ve been in the real world that’s causing growth, but it was not at all obvious.
    • We decided this word of mouth was partly from the aesthetic appeal of the device, the consistency of the design of the device, with the name of the device, so people can remember. You see the square, it’s called Square, and that’s easy to remember when you want to go sign up. It worked for the early days.


7. The team you build is the company you build (especially remotely).

  • I learned this from Vinod Khosla when he was on the board at Square. He said, “The team you build is the company you build.” At first, honestly, I found it a little surprising, because typically people in Silicon Valley think about technology and technical advantage and IP, and then they think about distribution advantages, and distribution strategies and network effects. They often forget the people and the way he expressed it, it was just so simple. It was one of those things that every minute you think about, it gets more and more powerful and insightful. He mentioned this to me maybe 8 or 9 years ago, but I still think about it every day. The team you build really is the company and with the right people you might have a phenomenal company, but a lot of people have an unmitigated disaster and most companies are somewhere in between.
  • Regarding teams doing remote working accelerated by COVID019: The benefit of being co-located is mostly extemporaneous conversations; dialogues that wouldn’t have happened by scheduled meeting, by fiat, by calendar or by remote. It’s the step-function of innovation that I do worry about remotely. I think about how many really good ideas at PayPal came from spontaneous meals together or spontaneous late nights, like over a drink or pizza. Some of those ideas are really 10X ideas. But ideas happen in random time intervals.
  • A lot of people are trying remote for the first time right now. The good thing is their existing relationships at all these companies that are suddenly switched to remote because of COVID. I do wonder about how high fidelity the debates and dialogues would be if there were no preexisting relationships from the real world before these companies had to go remote.
  • It goes back to knowing the rules. I think there are some advantages to remote working if you know which rules you actually can’t break.


8. Ridiculous ambition + knowing which rules to violate = exceptional Founders

  • Founders need to think about what they are doing differently and why? What are their secrets? Why are they likely to have unreasonable success?
  • I mean, if you think about it, it’s heroic, almost ridiculously so, to have someone raise their hand and say “I’m going to change the world.” “I’m going to change the entire financial services world.” “I’m going to change the entire real estate world.” “I’m going to change this entire whatever.” That’s kind of ridiculous. But you need people who can take on ridiculous ambition.
  • That’s when you can have a dialogue about, “Well, what rule do you violate? Why?” And that allows you to understand how the person’s brain works and the calculations they’re making.
  • The bad version of that conversation is when they don’t even realize they’re violating the rules, or they don’t understand the reasons why they’re deviating. That’s usually a disastrous recipe for a mess because you don’t want to violate all the rules. You want to select the least. If you’re trying to reinvent everything, that probably means you’re not really successfully reimagining anything.
  • Look for people who are ambitious, definitely. There’s ambition and then there’s ambition. I like to find the outrageously ambitious people. Borderline a little crazy. I’ve certainly worked with and worked for a lot of people that fit that DNA, so it doesn’t bother me. I expect that it’s part of what makes the person super impressive. When they see the world differently, I expect they will occasionally have very strange reactions to the world.
  • The people who really want to walk through walls, who you know will walk through that wall one way or the other — that’s basically the most important thing in a Founder.
  • Then they need the IQ and horsepower to understand why and how to walk through that wall.
  • When you meet a Founder, it’s very hard to project beyond what this person is capable of today — instead you want to project what is this person going to be like in 10 years? And that’s really a growth question, so you’re looking for a sustained rate of growth.
  • What makes the exceptional Founder, the real outlier, can be one of two things. They are either outrageously good at one dimension — extremely world-class. Like, “I have never seen someone like this in X-dimension.” Or they have a compounding rate of learning that’s absurd. And you get to go along for the ride and for five or ten years and just watch them grow.


You can listen to the podcast conversation here.

Connect with James Currier

24 Ways B2B Marketplaces Win

24 Ways B2B Marketplaces Win

by James Currier (@James Currier). James is a Managing Partner at NFX, a seed-stage venture firm headquartered in San Francisco.

24 Ways B2B Marketplaces Win

The internet is 30 years old, but business to business commerce and services remain stuck in the past. Most companies still don’t use modern software.

20 years ago, with much fanfare, Founders and VCs made an attempt to bring many B2B marketplaces online. It failed spectacularly (see the final section of this essay for more discussion of this).

Finally, 20 years later, a lot has changed, and B2B marketplaces are starting to work.

I see 6 general reasons why:

  1. Online purchasing became normalized for consumers. People expect the same interface when buying at work for B2B.
  2. Financial infrastructure that didn’t exist before is now available.
  3. The scale of the internet is far bigger, meaning more opportunity for liquidity. There were only about 300 million people on the internet during the first wave of B2B marketplaces.
  4. Prevalence of mobile and IoT devices. It’s now easier to get the supply and data into the system, allowing for automated inventory/reselling/tracking, etc.
  5. There’s more willingness by Founders to operate managed marketplaces — taking on logistics and fulfillment, transactions, QA services, and building trust online.
  6. The ownership of many businesses has been passed onto a more digitally literate generation.

Just as the last 15 years have seen tremendous consumer marketplace success stories, we expect to see the same level of success for B2B marketplaces over the next 10 years.

Today, we’re sharing 24 ways to make B2B marketplaces work. Founders who can execute using these lessons will be in a position to revolutionize B2B markets.


The NFX Marketplace Glossary -- Founder Resource


1. Create a new set of transactions

Find transactions that are not happening today, and enable them to happen. Most Founders see a market and say “How can I digitize that transaction and capture a percentage of it?” That’s fine. But sometimes it’s better to say “Who isn’t making any money in this market at all? Who can I help launch into business in this market?”

If you can take “non-participants” from $0 revenue to $X revenue, and if they can build their business around your marketplace, they will become loyal nodes in your marketplace, helping you grow with less resistance.

This is important because other companies that have revenue under the status quo will resist your growth. They will worry that as your marketplace changes their market, they could lose revenue, lose margin, or lose an advantage they think they have today. This risk aversion is simple human nature.

2. Understand B2B buyer psychology

In B2B, buyers’ minds are focused on their margins. That’s the core of their business. And they’re highly aware that your rake could cut into their margins.

They also care about quality, certainty, and the hope that the purchase will give them an advantage against their competition now and in the future. A B2B buyer brings a rational, multi-level consideration set to transacting on your marketplace.

Further, a company buying from you could become dependent on you for their margins, and thus their livelihood. You could make or break them, which is a lot of risk for them. So you can see why so many established businesses are wary of B2B marketplaces.

Contrast this to buyers on B2C marketplaces who typically use a marketplace for convenience, speed, and availability. They are much less sensitive to your rake, and they’re more interested in finding what they’re looking for and getting it quickly. And since a B2C marketplace only controls a fraction of their lives, they don’t worry about whether they buy it from your B2C marketplace or some other source.

3. Become a student of clever pricing strategies

Because B2B buyers and sellers are much more sensitive to margins, pricing — and how it’s communicated — is key to making a B2B marketplace work. You must become a student of clever pricing strategies. Do you put the rake on the buyer, the seller, or both? Do you build your rake into the named price? Do you show pricing? A traditional rake might not be the best way to monetize. So be sure to experiment and iterate on it with knowledge of what has been tried before.

4. Look for the “network interrupt”

In B2B, you are often going up against an “if it’s not broken, don’t fix it” mentality. People have grooved into their current workflow/decision-making and prefer to stick with what they know. This compounds across an industry. Think of a market like a network of people. If everyone in the industry is doing things a similar way, it will feel like more of a risk to try something new, even for the sake of greater efficiency.

B2B marketplaces should look to create a “network interrupt” that forces people out of their patterns. A network interrupt can come in the form of a new economic reality or emerging technology that changes the experience dramatically. Or it can arise from a competitive situation — for example, if your marketplace empowers one visible node in a new way that causes the other nodes to react out of perceived competitive pressure.

5. Start on the outskirts

Don’t immediately try to attack the center stronghold controlled by winners and market incumbents. They have a vested interest in preserving the status quo because they often have more to lose than to gain if the market is made more efficient.

Instead, it might be a better strategy to start on the outskirts of the market and work your way in. Focus on the marginal nodes with the most to gain from a new way of doing things. This can be the best strategy until you hit a critical mass in your marketplace and get your 2-Sided Marketplace nfx going.

6. Talk to customers, build friendships

For B2B marketplaces, ongoing customer insight is critical. Talk to your customers. Don’t just watch the data coming out of your software. Get to be friends with people. Reach out to them directly, on video calls, phone calls, emails, texts, and meet up with them for breakfasts, lunches, dinners, conferences, weddings, etc.

During several periods in the evolution of your B2B marketplace, you should expect to spend 50% of your time talking to your users directly, asking them questions, and getting feedback.

7. Avoid markets that are too consolidated

We wrote in the NFX Marketplace Scorecard that online marketplaces typically do best when there is a high degree of fragmentation on both sides of the market. If there are only a few sources of supply or demand in a B2B market category, online marketplaces will not see much success.

Fragmentation is Good B2B Markteplaces NFX

This is because fragmentation is an indicator of lots of competition, so 2-Sided Marketplace nfx will be quite powerful when fragmentation is high — once a critical mass on one side of the market joins a marketplace, their competitors will have no choice but to follow.

Consolidation is bad B2B Markteplaces NFX

Consolidation in the market, however, means that the powerful players on either side will be able to leverage their market share to prevent the successes of new marketplace entrants. Either that or the marketplace will be overly reliant on big players and will be crippled if any one customer defects. Either way, it’s not ideal for building a marketplace.


NFX Marketplace Scorecard


8. Have patience, and be relentless through seasons

Remember that B2B marketplaces are “hard planes to fly” and they take 5-8 years to get going. So the pilots — the founding team — need to be data-driven, humble, and tireless to keep flying that plane properly.

Your B2B marketplace will go through many seasons, and the product needs to do different things in each of the different seasons. Be prepared to adapt with pricing, guarantees, supply-side concentration, geographic restrictions, press announcements or stealth, special incentives to certain nodes to get their commitment, SaaS tools to lock in one side or the other, allowing disintermediation and then stopping it, fintech augmentation, etc.

9. Become a broker yourself

In many B2B markets, brokers serve as intermediaries between buyers and sellers. They provide trust and consultation services for both sides in a situation where the transactions are large and buyers often need help selecting the right supply for their needs.

Simply matching supply and demand is often not enough. Discovery was the primary function of the first generation of “listings” marketplaces, but this model is not as useful for B2B. One strategy is to become a tech-enabled brokerage yourself, then move to automating on one or both sides of the marketplace later.

10. Build software for brokers

A second strategy to deal with B2B markets where brokers are prevalent is to give them the software, data, and access to supply or demand to enable them to do their jobs better. This converts brokers from obstacles of your marketplace into advocates.

My partner Pete Flint, for example, did this when building Trulia by creating an XML feed standard allowing real estate brokers to syndicate their listings to Trulia from their own websites, saving them time and effort while expanding their exposure.

11. Offer a free/subsidized trial

Keeping a business from having to go through the internal politics of having to decide to spend money — or give up a percentage rake — can speed up your sales cycle.

Of course, offering a free trial can be dangerous. You have to do it in the right way. A few ideas we’ve seen work:

First, be clear about what the real cost will be in the future once the trial expires — not just with your point of contact at the company, but everyone else behind them who will be displeased if they aren’t aware of what happens when the trial expires.

Second, create a “Pioneers Club”: a limited-access group of early customers. This makes it known that there are only a limited number of trials being offered so that people feel they have to hurry before someone claims their spot. Further, limited access also lets you explain to later users why they aren’t getting the same deal since the Pioneers Club is closed. You’ll be able to explain that it was a limited trial period.

Offering a free/subsidized trial can also help you deal with the chicken-or-egg problem, a problem we’ve previously written about when we first revealed the 19 tactics for solving this classic marketplace problem.

19 Chicken-or-Egg Tactics


12. Communicate your growth path with attention to the details

Remember, B2B market nodes tend to be tight-knit. Everyone talks. The network density is very high. They all know each other from the trade conferences, the councils, and the industry dinners. You have to assume that everything you tell one person in the market will be known by everyone else. How you build your marketplace will become known, so how you start and grow needs to be carefully scripted and communicated.

13. Establish trust with KYC services

B2B marketplaces should consider doing background checks on nodes on both sides of the marketplace so that you can establish trust in your brand. Trust is key. In the last 6 years, KYC (know your customer) companies have become more available and make it easier to do this.

14. Add consultation services

A big part of the way offline B2B markets work today is to include nuanced and personalized information with transactions.

For example, when I buy water pipes from a broker, they give me advice on the different product options, regulations that might apply, and tips on how to use them best — information that would be hard to find in a different way, and is tailored to my unique situation.

As a marketplace, in order to compete with the brokers entrenched in a vertical, you might have to offer similar value. Inventory is often only part of the equation.

15. Add coordinators

To create liquidity in your marketplace, you might need to become a managed marketplace where you add a product manager or coordinator to manage different pieces of the supply side to create an adequate (liquidity-creating) product for the demand side. This can appear to be “free” work that the marketplace does. In reality, this is an extra cost to you, and you need to be sure to get adequate rake in the marketplace to cover these additional costs.

16. Create SaaS workflow tools

Create workflow tools for embedding for one or both sides of the marketplaces to incentivize repeat usage on both sides without multi-tenanting.

This can’t be emphasized enough.

We’ve written about the 4 types of defensibility here. The network effect defensibility you’re trying to achieve with your marketplace is the big prize, but the “embedding” defensibility is the intermediate prize where you embed your SaaS tool into the workflow of your demand-side or supply-side nodes. So yes, this requires you to become a SaaS company. But this doesn’t mean you have to charge them a subscription fee like a SaaS company would because your revenue model can be around marketplace transactions.

Another way to think about it is that you’re building a free or nearly-free SaaS tool company that monetizes on the transactions.

17. Find the “white-hot center”

Instead of trying to capture an entire market category all at once, it’s smarter to appeal to a focused niche. Target the right segment of buyers or sellers to start with. Find the people in your market category who are most in need of the supply or demand you can unlock for them. Capture 85%+ of these best nodes’ volume and expand from there.

18. Focus on the harder side of the marketplace

Early on in building a marketplace, you have to figure out whether supply or demand is more difficult to attract and focus your whole company on that. In some B2B marketplaces, if you get supply, the demand will show up. In others, if you find demand, the supply will show up.

One of the big mistakes a Founder can make is to prematurely split the company into two teams, one in charge of growing the supply side and one on the demand, when growing only one side really matters. For human reasons, the rest of the people in your company will naturally try to support both people. Both sides will want to take up air time at company meetings and be acknowledged for their work. And it’s a distraction.

What you really want is to determine which side is harder and then put the whole company on that one side. At the early stages, the other side really doesn’t matter.

19. Become a Fintech-Enabled Marketplace

As online marketplaces have evolved over the last 10 years, there has been a consistent progression towards capturing more and more of the transaction online.

Adding fintech support for marketplace participants including insurance, financing, etc. will help guard against disintermediation and multi-tenanting. B2B transactions enabled by financial services will create higher retention and a more seamless experience.

20. Go mobile

A B2B company can still get a big advantage doing something excellent on mobile. 100% of the employees of a business are on mobile because of their personal smartphones — but most B2B marketplaces have done little with mobile.

There are many opportunities, but you can imagine that maps, real-time tracking, mobile price bidding, availability alerts, quickpay, messaging, video voicemails, and other mobile-first features would be valuable for B2B.

Ask yourself: what would make a standout or can’t-live-without feature for the supply or demand side that would be enabled by mobile?

21. Use notifications to maximize transparency

Delivery tracking and notifications are already prevalent in food delivery and ecommerce. Uber Eats and Amazon send you notifications when you can expect your order to arrive, and this consumer expectation will cross over into B2B.

People will want to know the status of their transaction. Delivery notifications at every step of the way, using maps of the location of the order, or at least a map of where in the process a transaction is, makes the timing of the transaction transparent to both sides. This will give them the feeling of having more control and visibility into when and where they are getting the thing they are buying.

22. Provide an intermediate warehousing step

It’s expensive and a pain, but full service via providing warehousing yourself might be what you need to grow the network and add enough value not to be disintermediated.

This is an offline way to own more of the transaction. Some would call this a “managed marketplace,” where you’re guaranteeing a certain service level. You take on more revenue but also more cost and risk.

23. Hire the best salespeople in your market

In building a marketplace, getting to liquidity is everything. By bringing top-performing salespeople and former brokers from your market onto your team with the promise of working with a modern, faster competitor, you can bootstrap your distribution. Have them bring their book of business and expertise with them.

24. Target new products and new services

New products or services that didn’t exist before are often a good way to break into a market because the margins are higher and the market is not yet efficient. New enabling technologies open up new greenfield opportunities that incumbents overlook because they’re busy focusing on their core business. By creating new supply or demand you can create blue ocean opportunities.


Why Now Is The Time To Build B2B Marketplaces

20 years ago, optimism for B2B marketplaces was high, and there was a large influx of capital to startups. They failed, creating a cloud of disappointment and skepticism that has haunted B2B marketplaces ever since.

They included procurement marketplaces like FreeMarkets and Vertical Net, Chemdex and Chemconnect in chemicals, E-steel and Quadrem in metals. The list goes on. Hardly any of them are still around.

As we listed above, there were a few reasons why the first wave failed. We believe these reasons no longer apply, and that B2B marketplaces built in the 2020s will fare far better.

We’ve written before that startup timing is about three critical factors: economic impetus, user behavior, and enabling technologies. All three are much more favorable for online B2B marketplaces after 20 years.

Founders have to overcome serious obstacles to successfully build B2B marketplaces.

For Founders who can successfully navigate, the opportunity is there to build transformative and iconic companies in this space over the next ten years, bringing the biggest markets in the world — B2B markets — online and into a new era.

Content Upgrade Marketplace Scorecard

Connect with James Currier

Calling Bio Startups Who Want To Raise Capital (Final Deadline July 17)

SynBio Beta Draft NFX

SynBio Beta Draft NFX

The deadline to apply is July 17th.  When VC’s compete, you win.

The Bio Draft is a way for Bio startups to quickly get in front of 10’s of top VC’s to raise capital.  We ran the first Bio Draft within 2019 with SynBioBeta, and it worked so well, so we’re doing it again this year.  The idea is that like the NFL or NBA teams draft top athletes to their teams, VC’s draft top startups into their portfolios.

It’s not a “competition.”  Theoretically, all companies that are accepted into the Bio Draft could get funded. Founders get to choose which VC’s they present their Company Brief to.  Participating in the Draft is private, and will never be public until you want it to be. And you don’t need to present on stage unless you want to on Investor Draft Day, Sept 1st.  The Draft is designed to heavily favor founders so that top founders are encouraged to use the Draft to accelerate their fundraising.

Who should apply:  Top teams that are looking to fundraise in the pre-seed, seed, and series A stages.  Some teams have already raised seed, and others are teams that are just forming out of industry or out of academia.  It’s a good way to test the waters.  You might be better than you think.

Here’s how it works:
1) You create a private Company Brief; uploading a deck, answering 12 questions, and recording a 1-minute video of you and your team.
2) If selected for this year’s Draft, you will receive a list of VCs that will compete to Draft you (i.e. invest in your startup). You choose which VC’s see your Brief.  You will have the choice to present at the SynBioBeta Summit Investor Day on September 1, 2020.
3) The VC’s will have 4 weeks to review your brief and conduct research, perform diligence, and negotiate their investment.
4) You might have more than one VC Draft you, just as you would in any fundraising.

The FAQ is here.

Spread the word.  It’s a new way to get funded that really favors the founders.

The Product Frameworks Behind Superhuman

The Frameworks Behind Superhuman - NFX Podcast

by Pete Flint (@PeteFlint). Pete is a Managing Partner at NFX, a seed-stage venture firm based in San Francisco.

The Frameworks Behind Superhuman - NFX Podcast

Disclaimer: NFX is an investor in Rahul Vohra’s angel fund.

While most companies are focused on building a beautiful machine — a 100% tech-driven, algorithmic, human-free experience — by contrast and even by name Superhuman is oriented in the opposite direction. The email company is known for its personable, high-touch onboarding, requiring significant human interaction. When others talk about automation and breakneck scale, Superhuman talks about spending time with customers and launching small.

It’s a counterintuitive approach to building product. My experience at Trulia was similar. While our initial vision was full automation, when we combined great software with human touch, our conversions skyrocketed.

I wrote in a recent piece on 28 Moves to Survive and Thrive in a Downturn that the only way to break through in a crisis — or to beat the competition under normal circumstances — is to 10x your product by offering a dramatically better product experience. 10x product outcomes are a result of how you as a Founder think, and it’s almost always counterintuitive to the conventional approach. It’s a matter of conviction.

Rahul Vohra is one of the rare Founders and product builders with this conviction. He is the Founder and CEO of Superhuman, where he and his team are building the fastest email experience in the world. Rahul was previously the Founder of Rapportive, acquired by LinkedIn in 2014.

I recently spoke with Rahul for a special NFX “keynote” podcast. His strategic thinking on product-market fit is verging on legendary.

In this NFX podcast episode and essay, Rahul shares the frameworks he wants every Founder to know about:

  • Customer Onboarding
  • Product Development
  • Positioning
  • Pricing



1. Don’t Launch. Onboard.

With any email client, task manager, or calendar app, you have an especially massive surface area for bugs, because you have wide variability in how users want to use the product.

If you run a traditional Launch and sign up tens of thousands of users quickly, they will find thousands of bugs and quickly overwhelm your team. You won’t be able to fix the issues fast enough. Your users will then be disappointed and churn out of the product — and tell everyone about their poor experience.

Instead, do a measured, rolling, Founder-led launch in 4 distinct phases that involves onboarding your earliest users:

  • Phase One: Testing Readiness — The product Founder (ideally this is the CEO) should do the onboardings to test whether the company is even ready to do onboardings. The Founder should be able to do them best because she or he holds the most integrated and comprehensive view of the product. You should be doing at least five to six onboardings a week. You know you are ready for phase two when you have great metrics (retention, user engagement).


  • Phase Two: Testing Limited Scalability — Another senior member of the team, who is not a Founder, should take the lead. The primary goal of this phase is to show that somebody other than the Founder can do onboardings and still produce great metrics. (In our case, it was the Head of Growth.) The secondary goal is to move onboarding toward something that can scale. We reduced onboarding time from two hours down to one hour, and ramped to 20 onboardings per week, still keeping great metrics.


  • Phase Three: Testing Wide Scalability — Build a full-stack growth team. Everyone on the growth team does demand generation, lead qualification, customer support, and onboarding. The primary goal of this phase is to show that somebody other than a senior member of the team can do onboardings and still produce great metrics. Secondary goals are to further evolve the onboarding experience towards something that can scale, and create training plans for the next phase of growth. Expect the growth generalists to be doing 20 onboardings per person per week alongside other responsibilities. This phase usually lasts a few months. We reduced the onboarding time from one hour to 45 mins without a degradation in metrics.


  • Phase Four: Scaling Revenue — Build a team of onboarding specialists that should be able to do onboardings better than anyone in previous phases. The primary goal of this phase is to scale revenue while maintaining everything that makes the experience delightful and magical. During this phase, we got onboardings from 45 minutes to 30 minutes.
    • On Training: It’s super important to run a comprehensive training program for each new onboarding specialist. They are now the front line of the company. Our training program runs for 8 weeks. Once fully ramped, each onboarding specialist is able to do 35 to 45 onboardings per week.
    • On Finding Onboarding Talent: Founders often ask me the ideal background of an onboarding specialist. Sales backgrounds can work well but we’ve found that other backgrounds — teaching and hospitality to name two — also work very well.


Caveat: By all means, do a traditional launch if you need one of the three Cs quickly: capital, candidates, or customers.

Superhuman's Product Frameworks - Founder Resource


Superhuman’s Six-Step Onboarding Approach

I myself did the first 200 new user onboardings in Phase One. I wasn’t concerned with how long each onboarding took; many took two hours. Each onboarding had six parts.

  1. Give the new user a detailed demo of Superhuman, and share what makes it magical and delightful.
  2. Reminder that Superhuman is a paid, premium product and test price sensitivity with the Van Westendorp Test.
  3. Ask how they currently do their email and take notes on all the Superhuman features they would benefit from.
  4. Show them how to get through email in Superhuman twice as fast as they were doing before.
  5. Insist that they do email with you, live, for 30 minutes. Doing it with them is crucial because every time, I would find 5 to 10 bugs that I would send back to my team. We would make sure to fix them within a week. If we didn’t, we wouldn’t be able to surface the next set of bugs that we should address.
  6. Send them a personalized gift (I would send a bottle of wine or whiskey) to show them how much you valued their time. This obviously slows down as you get out to scale with many thousands of users.


2. To 10x Your Product, Study Game Design.

We have a product philosophy of using game design to make our software more fun to use and help our users move faster.

Here’s how it works. We start with a philosophy that is different from most of Silicon Valley. Rather than focus on features that users need, we focus on how software makes a user feel.

Business (and most productivity) software feels like work. We design our products to work and feel like games; this is the core of why people fall in love with it. Nobody needs a game to exist. There are no requirements. For that reason, when you make a game, you don’t worry about what users want or need. Instead, you obsess over how they feel.

When your product is more like a game than work, people don’t just use it. They “play” it, they find it fun. They tell their friends, they fall in love with it. Game design turns out to be an altogether different kind of product development.

I learned to code to make games and worked as a game developer. It turns out there is no unifying principle of game design. We are building those principles, drawing upon the art and science of psychology, mathematics, storytelling, and interaction design.

We’ve identified 5 key factors to consider:

  1. Goals
  2. Emotions
  3. Toys
  4. Control
  5. Flow

Across these, we further identified many principles of game design as we built Superhuman.

For example, “Are toys the same as games?” We play with toys, but we play games. A ball is a toy, but football is a game. And as it turns out, the best games are built with toys. Because then they are fun on multiple levels, the level of the toy and also of the game itself.

As a single example, consider our autocompleter which you use to snooze emails:

a) You type whatever you want. It does its best to understand you. For example, “two d” becomes two days and “three h” becomes three hours. It is fun because it’s a playful exploration. Users find this feature — this toy — and start to ask,“What can it do? When does it break? How does it work?” This becomes a game for them.

b) They might ask “I wonder what happens if I keep typing 10?” It turns out that is October the 10th at 10:00 PM. Or how about a sequence of twos? That’s February the second, 2022 at 2:00 PM. And then we see people start trying more complex inputs like in a fortnight and a day.

c) Users keep finding pleasant surprises. For example, time zone math happens without you ever thinking about it. You can type in 8:00 AM in Tokyo that turns out to be 8:00 PM Eastern time. We weave the surprise through the product.

d) Sometimes the surprises have no real purpose. For example, you can snooze emails until never; you can literally type in the word “never.” Then that email will never come back. If you are thinking about this from a “feature’ mindset, why would you have that option? It’s the same as deleting an email. But from a game mindset, it’s fun and playful so it makes users happy and keeps them engaged.

Consider all the features of your own product and ask yourself these questions:

  • Do they indulge playful exploration?
  • Are they fun? Even without a goal.
  • Do they create moments of pleasant surprise?

If so, you have a toy and you’re on the way to building a great game… even if it is productivity software.

Superhuman's Product Frameworks - Faded List


3. To Nail Your Pricing, Start With Positioning.

We first started by thinking about positioning. We were heavily influenced by Madhavan Ramanujam and his book Monetizing Innovation. For those who don’t know Madhavan, he’s a partner at Simon-Kucher & Partners, the preeminent pricing firm in the valley. The thing that I got from that book was before you figure out pricing, you must first figure out your positioning.

Then we talked to Arielle Jackson who was the first Product Marketing Manager on Gmail at Google. She advises using a simple but effective 6-part formula to determine positioning:

  1. For (target customer)
  2. Who (statement of need or opportunity)
  3. (Product name) is a (product category)
  4. That (statement of key benefit)
  5. Unlike (competing alternative)
  6. (Product name) (statement of primary differentiation)

Then we started to ask ourselves questions. Are we the Ford of email? No, not really. Are we the Mercedes of email or the BMW? Maybe, but not quite. Are we the Tesla of email? We’re getting there, but it’s not quite right.

In 2015, we came up with the following positioning for Founders, CEOs, and managers of high growth technology companies who feel like their work is mostly email.

“Superhuman is the fastest email experience ever made. It’s what Gmail could be if it were made today instead of 12 years ago. And unlike Gmail, Superhuman is meticulously crafted. So that everything happens in a hundred milliseconds or less.”

The positioning makes it clear Superhuman is a premium product. From that, we moved on to pricing.

We asked 4 questions:

  1. At what price would you consider Superhuman to be so expensive that you would not consider buying it?
  2. At what price would you consider Superhuman to be priced so low that you would feel the quality could not be very good.
  3. At what price would you consider Superhuman to be starting to get expensive? (So that is not out of the question, but you would have to give some thoughts to buying it. This is the question we paid most attention to.)
  4. At what price would you consider Superhuman to be a bargain and a great buy for the money?

Since we were building a premium product we paid most attention to the third question. The median answer to this question actually turned out to be $29 per month. A few conversations with some pricing experts later, we rounded up to $30 per month.

Rounded prices signal quality; prices that end in a 9 signal a bargain.

That’s how we picked our price.

Founder Resources mentioned in this podcast:


To learn more about Superhuman, visit Subscribe to the NFX podcast for more insights from top Founders on how they built iconic companies.

Connect with Pete Flint

3 Reasons Why NFX Is Investing in Jupiter

by Pete Flint (@PeteFlint). Pete is a Managing Partner at NFX, a seed-stage venture firm based in San Francisco.

From left to right: Jupiter Co-Founder and CEO Chad Munroe, Co-Founder and COO Anuraag Nallapati, NFX Managing Partner Pete Flint, Co-Founder and CMO Anna Pinol, Co-Founder and CTO William Yin. Previously Talar, NFX worked with the team to rename them Jupiter.

Jupiter is an online grocery-delivery service that offers guaranteed delivery times and a machine learning algorithm that builds out your grocery list so you spend less time browsing and placing orders, and more time doing things you’d rather be doing. It’s groceries on auto-pilot.

NFX co-led Jupiter’s $2.8 million seed round last summer, with participation from Khosla Ventures. We are sharing this news now as Jupiter comes out of stealth mode ready to become leaders in the rapidly growing world of online grocery delivery.

In NFX tradition, we want the entire Founder community to benefit from funding announcements so we’re sharing the 3 biggest reasons we invested in Jupiter. As Founders ourselves who’ve started 10 venture-backed companies, we believe this level of transparency can shed greater light on how VCs see your startup during the pitch process.

Here’s what we saw in Jupiter…

1) A Passionate Team That Works Well Together

There are Founders who work well together, and then there are the Founders who are so in sync they take it to the next level. The Founders of Jupiter are the latter. When NFX first met the team in April 2019, they were graduate and undergraduate students at Stanford. Then they went through Y Combinator and they shared a home. During this time, we were struck by their backgrounds, their scrappiness, and their overall passion for this business.

The team is impressive and also very complementary. CEO Chad Munroe met co-Founders Anna Pinol and Anuraag Nallapati during their first year at GSB and worked on a business idea together. Anna had ecommerce and delivery experience from her time working at Amazon Prime. Chad had worked in product for SpaceX and Pratt & Whitney. Anuraag Nallapati is the former head of analytics at one of the largest logistics companies in India, and the fourth co-Founder, Will Yin worked as a Stanford machine learning researcher and engineer at Virtualitics. The co-Founders are excited to be building a company together, and are well aware that their biggest asset is speed. This helped them pivot their businesses model quickly earlier this year when the pandemic hit to contactless deliveries and sourcing their products from wholesalers.

2) An Enormous Market That’s Going Digital

The market size of supermarkets and grocery stores in the US this year is $682 billion. Groceries deliveries were moving online before the coronavirus pandemic hit, but the combination of sheltering-in-place and the continued need for groceries rapidly accelerated the trend. Instacart, Amazon, and Walmart grocery delivery services all experienced huge increases this Spring. Instacart alone saw an increase of about 450% in sales in April. And while some shoppers might revert back to in-store shopping, the longer term trends are clear and home grocery delivery is still in its infancy and transitioning to digital. Consumers today have discovered the convenience of having their weekly groceries delivered to their front door, and Jupiter will make it even easier for them.

3) An Opportunity for Innovation

We felt there was a lack of overall product innovation in the grocery industry and that there was a unique opportunity to build a new technology company in this space. Some of the first generation grocery delivery companies are a decade old and we believe this is an industry that’s in its infancy and has lots of room for innovation.

Jupiter offers its members guaranteed weekly delivery slots, and has automatic features designed to set your favorite items on automatic reorder. It’s algorithm drafts a grocery list for you to review, edit, and approve each week, all designed to save you time and more to come. is available today in San Francisco. You can read more about them in TechCrunch and sign-up here to get a 14-day free trial with the code: TRYJUPITER

Connect with Pete Flint

3 Reasons Why NFX Is Investing In La Haus

La Haus + NFX

La Haus + NFX

Company: La Haus
What they do: La Haus is a consumer-focused end-to-end residential real estate platform that facilitates traditional real estate transactions digitally in Latin America.
Industry: PropTech (real estate technology)
Funding: Total of $16M; $10M Series A
Co-Investors: Kaszek Ventures, Acrew Capital

At NFX, to make transparent to the founder community how VCs think, we like to make public our rationale for investing. We recently participated in a Series A round for La Haus. We also led the seed round and have known the team since they first launched in 2017. When La Haus Founder Jeronimo Uribe first cold emailed me, he was starting a business that grew out of a class project at Stanford about online real estate in South America. His sophistication was impressive and highly unusual for early founders. When we met the team, we were equally impressed with his co-founder and President Rodrigo Sanchez-Rios and CTO Santigo Garcia. The more we learned about La Haus, the more clear it became they were a perfect fit for NFX.

Here are 3 biggest reasons we decided to invest in La Haus.

1 – A World-Class Team with Local Expertise

The founding team is outstanding. They combine deep, local country knowledge and understanding of their specific geographical market – where they were born and live – with the best of Silicon Valley. They spent considerable time in the Valley as founders and as students. Jeronimo (Colombian) and Rodrigo (Mexican) both went to graduate school at the Stanford Graduate School of Business. The strength of the founding team and their global network gives them the ability to bring on world-class talent. We also love their scrappiness. By the time we first invested at the pre-seed stage, La Haus already completed more than 100 transactions, an early sign that this is a team that can execute on a big opportunity.

2 – Deep Market and Industry Knowledge

The founding team had spent many years in the real estate industry – one that I know very well from my time at Trulia. Prior to launching La Haus, Jeronimo and Rodrigo founded a real estate investment and development company in Medellin, Colombia that generated over $350 million worth of projects in retail, industrial, and residential properties. They know the LatAm real estate market inside and out. La Haus estimates residential real estate in LatAm is worth $10 trillion with over 150 million urban residential units. When it achieves market parity with the U.S. in terms of efficiency, LatAM should drive over 5 million residential real estate transactions each year. This is a large addressable market that is highly fragmented and inefficient. From his time in Silicon Valley, Jeronimo understands how great proptech companies have been built in other parts of the world and he grasps the market opportunity to professionalize, modernize, and drive innovation in LatAm real estate.

3. Good Timing

I’ve written about why timing is everything for startups. And I believe the timing is perfect for La Haus and the market need they are addressing – residential real estate in one of the fastest growing economic regions in the world. In my career, I have spent 10+ years studying and operating in the real estate industry, going back to my time as the CEO of Trulia. As a European, I’ve always been interested in learning from international models. I have studied similar online real estate businesses and how real estate markets are developing on every continent. The LatAm market remains highly fragmented. Information about real estate in LatAm is scarce. There is no equivalent of the Multiple Listing Service in the U.S. Even estimating market size is challenging. Inevitably, dominant marketplaces for buyers, sellers, and real estate agents form in every market. La Haus is positioned to be that dominant marketplace; it is a startup in the right market at the right time.

To learn more about La Haus, visit their website.

How Second Time Founders Can Win and Avoid Common Mistakes

The Second Time Founders Manual

by James Currier (@JamesCurrier). James is a Managing Partner at NFX, a seed and series A venture firm based in San Francisco.

Second Time Founders Manual - Knowns and Unknowns

This is the first essay in the NFX Second Time Founders Manual, a collection of essays and resources for Founders starting their second, third, or subsequent company.

As a Second Time Founder, you have lessons and networks from your first experience that set you up for success.

For instance, in my second company, I knew who to bring onto my team. I could easily raise capital. I could make decisions twice as fast.

But with these advantages came disadvantages. I didn’t seek out as much advice as I still needed. I spent my own money for 2 years but didn’t operate with the same precision as when I was spending other people’s money. I was more hesitant to launch.

It turns out these are all common Second Time Founder behaviors. I wish I had known about them beforehand. So here are our compiled lists.

Potential Advantages of Second Time Founders

The 5 main advantages you have —that you need to leverage or you’re lost— are the following:

    1. Your network. As we’ve written about, the value of your network compounds over time. Having built that network running the last company, you get to benefit from it.
    2. You can raise capital more easily. Investors believe you will make fewer mistakes because you’ve already made many on someone else’s dime. Investors believe you will move faster, hire better, and shoot higher because you’re a veteran and have a network.
    3. You can hire a better team. You know more people, and you know who the top 5% of them are. Again, your network. They trust you to lead them for the same reasons the VCs trust you. It may make no sense, but it’s an advantage, so take it.
    4. You can make better decisions. Because you have more experience, and because you know more smart experienced people and can call them to ask for advice, you should be able to make better decisions. Again, your network.
    5. You can make faster decisions. You have less confusion because you’ve got a better sense of what excellence looks like. You have a sense of what the high benchmarks are.


Common Disadvantages

At the same time, there are mistakes that Second Time Founders tend to make.

1. Overconfidence

Second Time Founders tend to be overconfident. You might expect things to happen for you. You might not be willing to dig as deep as you did as a first time Founder. There’s a risk of feeling entitled and becoming superficial.

2. Not Asking “Stupid” Questions

VCs and employees will trust you more as a Second Time Founder, and the problem is you might believe it too much. It can become a trap for your ego. It can become a block to your pursuit of beginner’s mind and your own learning. As a Second Time Founder, the reason you want to go through a second time is to keep learning. It’s a vehicle for you to become the best person you can be. Keep asking questions and keep learning fast.

3. Surrounding Yourself with Sycophants

Another trap is to surround yourself with sycophants and “yes people” who are hoping you know all the answers. This is where it really gets ugly. When you believe too much in your own stuff, you spend too much money, and your board is pushing you to grow and go big before any of the fundamentals are in and before you have founder-market fit and product-market fit. This keeps you from being humble and from looking at the fundamentals. You must surround yourself with people who are going to tell you the truth. Don’t see challenges to your thinking as friction. See it as keeping you grounded and improving your chances of success.

4. Too Much Money, Too Soon

The first time you raised, you maybe raised a little from investors, and after some work, a little more. At each stage, you were capital constrained, and that helped you focus and make hard decisions. On your second time, if you come out the gate and raise $6 million, you might think that you’re already in year two. But you’re not. You don’t have the culture, the team, the cadence, or the processes in place. You skip to the end without building the proper foundations. The cliche to describe this is “Don’t get ahead of your skis.” It’s very common for Founders who raise too much money to have a brain shift that ruins their leadership and eventually their company. Don’t be that Founder.


The NFX Fundraising Checklist


5. Underestimating the Role of Luck

My bet is that luck was a larger percentage of your success last time than you want to admit. Because you think you were “right last time,” you might fail to pivot or iterate fast enough during the early stages of your startup. Admit how much luck was involved to bring you to this moment in your career. If you take a moment to look, you will likely notice it was a “cascade of miracles” to get you to this lucky place.

6. Getting Impatient

You pick up an idea that is mediocre because you are desperate to get back out there. You could only take so many jogs in Golden Gate Park or whatever you were doing, so you grab an idea that seems pretty good. Then you blow through half of your money on that idea simply because you were feeling itchy at home.

7. Misunderstanding “Impact”

With more confidence as a Second Time Founder, you might be willing to start a business only if you can see a straight line to demonstrating positive social impact and meaning, like global warming or recycling or education. The impact becomes the driving force rather than the product or the customer. Unfortunately, now you have two ways to fail — the business fails or you fail to make the impact. As a result, counterintuitively, the probability of making an impact decreases. Most great businesses come from focus on the product and customer. Stay focused primarily there. Build a great business to increase your impact.

8. Taking an Idea Without Founder-Market Fit

These are three common traps here. One is when you see a business opportunity that doesn’t really fit, but you go after it because it seems like a good idea and you could make a lot of money. Another is when someone else gives you the idea, and you do it because you’d like to work with that person. The third is that maybe you were superficially interested in the idea and a VC said they would fund you if you do it. In any of these three cases, the trap is a lack of authenticity. A year in you realize you’re not actually that interested in the idea because you just pursued it for the business opportunity or the relationship opportunity, or because the VC said they would fund you. In all these cases, you skipped the founder-market fit. It’s unlikely to work.


Founder-Market Fit


9. Status Anxiety

Many Second Time Founders get drawn into a business to gain respect from the people they respect. Essentially you jump back too soon or in the wrong place out of anxiety to get appreciation or kudos. Ben Casnocha has a great blog post about this condition. There are at least two main behaviors with this mental state: first, you won’t launch your product before it’s perfect because you don’t want to look like a fool. Second, you jump back in to please status players. For instance, if a VC comes to you and says, “If you do this business we’ll back you,” and you really respect that VC, you might do it. Then suddenly you’re trapped. You’ve raised $4 million, you’ve got a team of 12, you’re pursuing something you’re not really that interested in and you’re doing it for status reasons. That’s bad for everyone, particularly you.

10. Overspending

As Second Time Founders, your brains can be stuck where you were at the end of your last experience, when you had a lot of revenue. You were used to big budgets and spending a lot. It can be hard to reset and go back to spending $40,000 a month instead of spending millions per month. This can lead you to overspend and burn through your capital quickly, which puts pressure on your fundraising and on your cap table.

11. Building a Team Purely Out of Loyalty

Your VP of Marketing or VP Engineering might join your new startup to work with you. But they need to also have founder-market fit themselves. We see a lot of Second Time Founder teams dissolving and churning within a year due to not building with an eye toward sequential, organic additions with the right fit.

12. Over Indexing on Previous Pain

A lot of Second Time Founders over-index on their pains from the last company way before they know if they have product-market fit. For example, if you had a problem last time with the technology and you couldn’t raise money and almost went out of business, you might have PTSD and refuse to go through that again. So you might overbuild a product before you know if you have product-market fit. Be clear about your PTSD from the last time and stay rational about what you’re solving for now. Don’t fight the old ghosts.

13. Not Seeing Your Operational Blindspots

Don’t let your past successes become blinders. Each time you start a company it’s different. You’re starting down a different path, at a different time, in a different market, with different people. You’re going to learn new things and it’s going to require new skills. We don’t want to pick on Googlers, but we’ll use them as an example. Google culture rewards iterating slowly and overbuilding technology for massive scale. So you might imagine recent Google alums iterate too slowly and overbuild technology in their startups. Ex-Googlers might also not understand how to get traffic because for years at Google they could just put a little link somewhere and have 10 million people using it the next week. We all have operational blind spots and misaligned mental models created by wherever we were before.

14. Partnerships

Another mistake Second Timers make is doing a lot of biz dev deals because they can. You’re older and you know more people in higher places. Maybe you’re at dinner with someone or you’re up in Tahoe together, and someone says “Hey, wouldn’t it be cool if we partnered up on this together?” You can’t biz dev your way to success. Stay focused on product and customers.

Your previous experience will guide you on your journey as a Second Time Founder, but it can also lead you astray. You have superpowers, but you have to keep them in check by being patient and deliberate, by making decisions for the right reasons, surrounding yourself with the right people, and by continuing to ask questions and to grow.


Wisdom from Second Time Founders

Ideas are solutions to problems. An idea is the start of a deep exploration of the problems people have. This mindset is how you discover great ideas worth pursuing. The problem should be a top priority for your target audience. Choose a problem that enough people need solved so you can ensure that your business actually gets users/customers. I like to assess the frequency, urgency and pain of a problem. How often do people have to solve it? How urgently do they need to solve it when it comes up? And how painful is their current experience? The key to finding a good idea is to get excited about the problem. Love the problem(s) you are solving, not your initial idea or current solution in have in mind.

I learned that working with the wrong people will absolutely destroy a startup. This second time around, I used a series of many co-working weekends over the course of a year to work on common problems to judge (1) product-founder fit, (2) commitment, (3) strength fit between myself and the people that showed up consistently, (4) character.  Ultimately, you need your values, work-ethic and priorities to align , as well as a balance of skills that compliment each other.

Finding a co-Founder is one area I paid extra attention to this time around – to understand what are the expectations on both sides both from responsibilities and desired outcome (i.e. what do you want to get out of this?). We did an exercise where each of us wrote a one-pager with their job description and also their best/worst case outcomes. The one rule was, you can’t see the other’s page before you share yours.

So many founders don’t realize what was lucky about their first time and they’ll be able to just do it again. Also, we tend to learn the wrong lessons from success or failure. My second startup is radically different from my first one, and I think it’s an advantage because there’s a tendency to over-extrapolate from what you did before, and industries change.

As a first-time founder, you’re constantly doubted and fielding rejection. Yet, as a second-time founder, people start to believe in you more and challenge you less, making it even more important to surround yourself with strong partners and advisors who bring diverse experiences and perspectives that push and challenge you, and your business, in new ways.

In one of my companies I raised an initial round of $8m which led to the notion that we could follow a multi-strategy approach and have a better chance of succeeding. In reality, instead of hedging our main strategy we ended up not executing any of the directions fast and focused enough. Having raised too much money got us to lose our focus – which took precious time to fix.

When starting Trulia, after the initial idea, the plan was based around how I could utilize some of the unique capabilities I had developed at my previous startup and at the same time try to eliminate the structural inhibitors to growth. Specifically, I had confidence as the growth person at, to scale the consumer audience and also navigate on how to partner with the industry to bring their inventory online. On the other hand, I was focused on building a business that was easier to scale (US vs Europe), higher margin (media gross margins vs travel commissions) and much more focused on a single vertical (residential real estate vs all things last minute). The combination of extending capabilities while eliminating barriers to growth from my previous work was hugely influential in formulating the plan.


If you would like to be considered for our invite-only group of Second Time Founders, where we plan to hold private forums and small-group discussions, complete this form.


Connect with James Currier

The Second Time Founders Manual

The Second Time Founders Manual

by James Currier (@JamesCurrier). James is a Managing Partner at NFX, a seed and series A venture firm based in San Francisco.

The Second Time Founders Manual

We have been Second Time Founders many times ourselves. We’ve also invested in tens of Second Time Founders.

Do you have an advantage as a Second Time Founder? Yes, you do.

As a Second Time Founder, you have a set of experiences and a deeper network that give you advantages. The research numbers prove this out. An HBS study found that while first time founders have a 21% chance of succeeding with their company, Second Time Founders who succeeded with their first company have a 30% chance of succeeding in their next company, and Second Time Founders who failed in their first company have a 22% chance of succeeding with their second.

Your experience gives advantages, but it also gives you disadvantages. So we put together this manual to share what we wish we’d known earlier.

We use the term “Second Time Founder” broadly. Our use of the term includes someone who was a Founder before and is now founding their second, third, fourth, or fifth company. But it also includes someone who played a critical role in a hypergrowth company. In short, our definition encompasses anyone who has already learned what it’s really like to run a startup. It’s not your first rodeo.

The first essay in this manual is How Second Time Founders Can Win and Avoid Common Mistakes.

We will continuously add new essays and resources to the Manual – the hard-won lessons from the 10 companies we founded ourselves, as well as lessons from the community of Second Time Founders.

If you would like to be considered for our invite-only group of Second Time Founders, where we plan to hold private forums and small-group discussions, complete this form.

Connect with James Currier