For this episode of Secrets for Scaling, we spoke with Balaji S. Srinivasan, Co-Founder and CEO of 21.co and Board Partner at Andreessen Horowitz. 21.co allows people to get paid in digital currency for reading and responding to email.
Prior to running 21.co, Balaji was the cofounder and CTO of Founders Fund-backed genomics company Counsyl. He also teaches occasional CS and Statistics courses at Stanford, including a massively open online course (MOOC) that enrolled more than 200,000 students.
Srinivasan co-founded 21 in 2013 but was full time as a VC at Andreessen Horowitz from 2013-2015. He took over as CEO of 21.co in mid-2015, and during his tenure, the company built technology for digital micropayments based on Bitcoin.
They recently launched their 21 Inbox product, which allows individuals and businesses to send and receive paid emails and tasks. Individuals can keep the money they receive for answering emails or donate it to charities like Black Girls Code. The product has been #1 on Product Hunt twice since launching just a few months ago. With nine years of founder experience, we talked to him about goal-setting, metrics, motivating a team, digital currency, and the future of Bitcoin. Full episode here:
Your initial goals will be mission-driven. “The initial phase of a startup is qualitative - it’s the zero to one phase.” Balaji used Uber as an example. If you simply looked at the market size of taxis, you would’ve never believed they could have built such a large company. He says, “there has to be some ideological, motivational, inspirational, or even spiritual component of why you actually want to do this thing. Something more than money.”
Phase two of goal-setting is product-market fit. After you get your first 10, 20, 30 customers on the enterprise side (or first few thousand on the consumer side), it’s time to optimize your process and focus on monetization. First, you’ll get your company or product working (making its first dollars) through an iterative process, then you’ll set more advanced quantitative goals.
There’s no excuse not to be data-driven from the get-go. With so many tools available making it simple to set up and track your key analytics, there’s no reason not to be making data-driven decisions from the early days.
You can’t use metrics to choose which direction you’re going into. What Balaji means is, you have to lead with your passion or the problem you’re solving. Qualitative goals start with an end state you’d like to see. They start with a passion, whether positive (send people to Mars) or negative (“I hate the way insurance companies manage health care expenses”). Then you start modeling out what the impact would be if your idea does work – if you’d make enough money to make the investment worthwhile. That’s the bridge. Your qualitative goal is your compass heading and your quantitative goals are the measurement of progress along the compass heading.
Setting individual goals is a balance between the long and short term. If you want your team to stand behind the company when you have a down quarter, you have to stand behind them when they have a down quarter. That’s why understanding the roles of short and long-term goals is so important. Short-term, metrics-based goals (i.e. increase signups by 13% in Q2) are effective for keeping team members focused on their highest priorities. The longer-term, cultural goals (i.e. send people to space) will keep them engaged. Sure, if a salesperson is consistently missing their targets each quarter, you need to have a conversation with them. But allowing the flexibility of one down period removes fear and encourages experimentation.
Engineers are motivated by… flexible work hours and good work conditions; feeling that they’re doing something meaningful (either from technology perspective or market impact); and working alongside people they enjoy. They want to experiment with interesting technologies and build something they find intriguing or important.
To maintain your desired culture, you have to communicate it. Balaji said this means having constant one-to-one meetings with your team members. When your team gets too big for that, ensure your managers take over that responsibility. Every person at the company should have a one-on-one with their direct manager once a week. Constant communication will help you spot early warning signs of unhappy employees or if your culture is starting to slip.
Within five years, Bitcoin and digital currency will be mainstream in tech. Balaji used the example of token sales, which is like a combination of equity and product crowdfunding. Rather than having angel investors buy your equity, you sell tokens to your web service. Token sales are currently in a bubbly high, which Balaji believes will drop off hard. But he thinks the concept is so powerful it will become more and more mainstream.
New innovations have second order consequences. Just as Facebook allows people to be more connected regardless of geographic location, Balaji believes digital currencies will eventually allow us to make more money in our free time. This is something worth considering as you build products.
As you scale, include a second measure of quality to compensate for possible gaming of the first metric. Balaji says, “for example, if you incentivize salespeople on the basis of revenue, you should also look at customer feedback or churn. Or if you’re trying to grow users, you should look at churn.”
- 16 startup metrics from a16z
- High Output Management by Andy Grove (check out our review of the book!)
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