Editor’s Note: Jason Warner is Venture Partner at Unusual Ventures and current CTO at GitHub, where he’s been for the past three years. GitHub was acquired by MSFT in June of 2018 for $7.5BN. Prior to joining GitHub, Jason was Head of Engineering at Heroku, Canonical, and 41st Parameter -- all distributed companies. He has a great deal of experience managing remote teams and building remote cultures, having been remote himself for over a decade.
Unusual Ventures held an AMA session with our founder community where Jason shared some key advice, perspective, and tactics learned from his time leading iconic companies during normal times and past market corrections. This is Part 1 of the series.
Part 1 will cover:
Stripe, Uber, Airbnb were all founded in the wake of 2008/2009. As a small company with very low burn rate, how do we best leverage our comparative advantage in flexibility and ability? What are large companies struggling with right now that startups can take advantage of?
Great companies are formed in many different times, but particularly in times like these. Right now, if you're frugal and you're able to achieve your goals in that manner, the likelihood of succeeding is going to go way up. Bad companies spend money to achieve outcomes. Great companies are able to achieve the same outcome without spending as much. It's just the nature of hyper-frugal businesses and business in general, so it's going to be a forcing function. A lot of very well-funded companies are going to survive this and still not be great companies, and a lot of very great companies won't survive this time period unfortunately. But you put yourself in a position to survive by being frugal. If you do survive and come out the other side of it, you're likely to be a great company.
Large companies by their very nature struggle with nimbleness and adaptability, and that is something that is key right now: how quickly can you adapt to the changing environment? In the course of two weeks, every company in the world basically became a remote company. How well you adapt to that singular change will tell you a lot about what you're able to do in the next 24 months. Amazingly, some large companies have been able to adapt to the situation quickly. On the other hand, there are some large companies who are claiming to be “essential businesses” because they’re not great at change and they know that going remote would put their business at risk. How adaptable you are and how nimble you're going to be—that's really what survival will be about.
What is an advantage to starting a company during a recession?
You become more frugal by default. You understand the value of dollars way more and that is something that is incredibly valuable as you grow and scale. I think dollars hide a lot of sins and you can get away with a lot of stuff because you have a lot of money. And a lot of the last 5-10 years have basically been about raising these mega rounds and not forcing companies to become capital efficient. We're all seeing the price that's paid by that. With valuations and even exits, money alone is one of the worst indicators of whether someone has built a good business. If you had a major exit out of your career and the only thing people want out of you is your money, you have failed in your career. The same thing applies if you're building a business. If the only value you bring is because you were able to raise mega rounds and endure and withstand, but you don't actually know how to run a capital-efficient business, probably not a good business to be in. I think that's one of the biggest advantages you can all take away from this—become a capital efficient business. Understand how to become a good business. Once you do and you survive and get through this time period, you will become immensely fundable. You'll have all the money thrown at you. But now's your chance to batten down those hatches.
How did your GTM strategy change/adapt to the market uncertainty (E.g., deal-sizes, time to sell, open-source?)
It's not business as usual anymore. At GitHub, we made an initial plan, but we're going to wait and see how the next few weeks go to obtain more data to make an informed decision of how we will have to adapt as a company. GitHub is in a very unique position. We're post-acquisition so it’s not a typical startup environment. However, I am a board member of a couple of startups and working with them through this. If you think about this as an 18 month to 24 month window, where we expect that the capital markets are a little bit more tightly closed, and you expect that your ARR might be reduced 50% or even two thirds, start modeling different scenarios there to understand what that looks like for your company. On go-to-market strategy in particular, just assume super high frothiness for the next 2-3 weeks, maybe even a month and don’t put too much pressure on yourselves or your team. You might say, "We've got to figure out what the data is actually telling us at this time. Are the deal sizes going to change or are people going to be receptive to what we're selling?" Because there's uncertainty all around. Obviously, if you're selling through a bottoms-up motion with developers, it's a much easier time for you right now compared to a tops-down motion with CIOs and CTOs because nobody knows what their budgets are going to be for a little while. Everything will change. People have to get approvals. Microsoft just instituted for the first time an approval process for over a certain amount to be spent, which is unheard of, because they needed to batten it down too.
Do you see enterprise customers now being open to discussing deals completely offline?
I think some people will permanently be changed, and some people can't wait to get back to getting in their office and doing business as usual. The best companies in the world will never go back to business as usual as they had before. The ones who do go back to business as usual are the ones who are aging and dying slowly. That's a very strong opinion because I think that most companies are too slow to adapt to the changing environment, and the changing environment is being distributed by default anyway. In the meantime, everyone has to adapt and figure out how to do deals remotely. A lot of people are holding out hope that this is a two or three week thing, and I think that they're trying to wait it out as well. I think that we're talking about a multi-month, possibly rest of this year type of scenario where it's not business as usual. Now it doesn't mean that we're all quarantined and we're all sheltered in place, but I don't think that we're getting back to business as usual the way that it was before for the remainder of the year.
I think businesses' appetites to consume technology and purchase it all virtually is definitely there. I do think you're going to have a maturity curve where companies that are probably between 200 and 1,000 employees will be more apt to purchase a piece of software remote and then maybe above that, it's going to be a little situational depending upon who you're working with or potentially the industry or the vertical. But we had teams doing millions of dollars a year where it was not rare for them to not meet with their prospects in person. I think the other thing too is you think about your responsibility in the current situation to actually close deals. Your job would probably be to make it so it's a no brainer for them. Remove the obstacles to saying no to get them to say yes. So, if you have found that the customers that you serve are uncomfortable because they don't have the budget, make it so they don't need to go ask for the budget or something like that. Or if you're uncomfortable because they're so traditional that they need to see someone in person, find a way to make it so that they don't need to see you in person, whatever is needed. If it's education or a lot of these things, lean into relationship investment. Or if they need to physically feel a product because that's what you're selling, ship them a whole shit ton of product. Figuring out a way to make the sales process more comfortable for them. So flip it from what they're going to change behaviorally , to what your responsibility could be to get them to that point.
With conferences getting canceled, what are effective ways to compensate for the dip in leads?
I would over communicate to everybody in the organization, your board, and executives that conferences are getting canceled and that you're going to change tactics to find new leads and are looking for other ideas from your organization and/or your board. When you think about sourcing leads, obviously, the more diverse source of leads you can find, the better. I think it's a good time to revisit how conference-driven you want to be for leads, or you could change and become more of a bottoms-up motion or a tops-down.
If you had an event that was set up, and you were going to do a presentation, you had a finite target audience. I'd look at things where you could take that and turn that into some sort of asset. A lot of the companies are writing e-books and codifying their expertise into content they can post online. Maybe it's something that you can then drive either organic or paid traffic to. Now, it's an asset that can be long-living and last longer than that event. Basically, it's like thinking about it from a channel perspective. You don't have the direct channel, but you still have the indirect and online channel, and you can still think in terms of building assets that are marketing assets that can then drive leads. These assets can then be used in any outbound sales to help spur conversations with prospects. Use this opportunity to become the known expert in the area. By codifying it, you then can more easily broadcast it, and you could reinforce that you're the expert in whatever your domain is.
If you’re able to find an attendee list or potential attendee list for the event, you can also still reach out to them. You can use the outbound through LinkedIn or email and say, "Hey, we know this conference was canceled. Saw you were planning on attending. We're still plan to do our session, but over Zoom." Give your outreach a two-week lead time and then say, "Hey, we're going to run our session virtually. We'd love to have you in attendance, even though the event itself has been postponed."
How do you see agency engagements being impacted? What considerations would you make in terms of negotiation tactics during these times of forced remote work and uncertainty?
Everything in life has always been negotiable, but everyone is more willing to negotiate now. I don't think that you should think of it as off the table to have negotiations because you've got financial pressures—they've got financial pressures; everything is available at that point. Don't use it as a moment in time to become gross. This isn't a moment in time to just go in and fleece the cupboards. I always think that all of these long-term arrangements should be equitable. Agencies will struggle in this time period, and so there will be opportunities to engage with them, just like you're going to have a glut of talent on the market. If you're in a position to hire people in the coming months, you're going to be able to pick up some top talent. It's just the nature of what's about to happen to everybody, so just be ready for those things.
How do you balance striking the right tone with various stakeholders?
Similar to the advice I give in normal times, you as a leader of your organization should be intentional about the type of organization you want to be and how you communicate. Being empathetic and having situational awareness is Leadership 101 from a communication standpoint.You can try to overthink it, but in times of crisis just like normal communication, you're going to make some people angry no matter what. You're not going to satisfy every group of people or every class of person by doing something on a good day, but in crisis that'll get worse. I recently said something that annoyed a group of people and I was fine with it because the thing needed to be said. I would have said it on a normal day. I was a little bit more empathetic than I normally would be, but I was still trying to strike that tone and balance. Ultimately, at the end of the day, you can't get bogged down all the way one way or all the way another.
How do you address this question: 'Will there be layoffs as a result of what's happening in the world?'
People’s worst behaviors or mindsets get magnified in a remote environment. Everyone's going to assume that layoffs are coming, and if you don't say adamantly no, people will assume the worst. The rumor mill is going to start. You can't say affirmatively no because if you do say affirmatively no, and you do have to do it at some point, you become a liar. People do not give people the benefit of the doubt in these types of scenarios. I think you just need to be transparent. Be super, hyper-vigilant, and transparent with your folks and say, "We do not intend to do layoffs. Here's our numbers. Here's our revenue. Here's our run rate. Our confidence is we'll be checking in with you on a regular basis. If it doesn't dip below X number, we don't have to do make cuts. And I'll be hyper-transparent with you all on this." That's the best way to navigate that situation. If you do have to do layoffs for whatever reason, don't do trickle cuts. Measure twice, cut once. You don’t want to have to go back and do that again because the second time you do it, everyone expects there to be a third time or a fourth time.
In these times of uncertainty, what is some tactical advice to ensure morale of the team remains high?
Morale sucks. It's going to suck. People are going to be worrying about their jobs. They have stressed home lives. I have been working remote for 10 years, and my home life is different now than it was while I was working remote because I've got three kids at home now. It's different. It's not business as usual. Winning solves a lot of morale problems so find those things to celebrate. It might seem trite in a normal course of business, but celebrate them. Find the small moral victories if you can and celebrate them on a regular basis. Find the examples of your culture that you want to reinforce. Celebrate that person and the achievement. Take a little bit of money and do some of those swaggy type of things to try to build some of the tribal nature. Be more thoughtful about it. Go and talk to somebody that you might not talk to in the company normally, and then just ask them some questions and get to know them. I have sent a lot of text messages or placed phone calls in the last couple of weeks, and they're all just healthy check-ins. Make time to do that. But I think the spirit of winning solves a lot of those problems. Find the small wins and the victories and celebrate those things. This is a part of scaling as an organization too. When you're two people versus 5,000 people, the first customer you get with a $100 check, you're like, "Oh my God, we got it." Now as a behemoth, you don't celebrate until it's a $10 million deal. Somewhere along the line, all of those expectations change. Well, now start rationing them down, back to where they might've been two steps earlier, and celebrate them. Maybe it's the completion of a sprint, and things went just slightly better than they normally would have. Awesome. Let's celebrate that a little bit.
Managing Remote Teams