Episode 1 Transcript: Scaling up from a startup to ... not a startup

This is the full transcript of the first episode of Inherited Composition. You can read it below, or listen to the episode

Gonto: Welcome to the first chapter, episode, or however you want to call it of Inherited Composition. In this episode we'll be talking about how to grow a company from a startup to, I don't know how to say, like, not a startup. I wouldn't like to call what I am an enterprise company. And for that, let us first introduce a little bit about what are our histories and what is our experience with this. What's yours, Guido?

Guido: Well, we started being friends out of college that wanted to do something together. So we decided to do a software company that helped other people develop their products. So in our case, we got offers from different people that wanted to get us to be their CTO, but we wanted to work together, so we decided, okay, there are a lot of people that want to start new companies. So maybe we can be that CTO for them and help them build their technology team and help them build their first products. So that's how Wolox started.

Gonto: It makes sense. For me I was actually at an inflection point in my life. So I've been always coding, and I realized that I didn't want to code anymore for a living, like all of my time. Because something that I realized, I like talking to people, being with people, and I wasn't doing that enough at my job. So I got an opportunity at Auth0 because I was introduced to Matias, the CTO, through Guillermo Rauch, one of their advisors, and I joined the company when there were actually eight people. That was four years ago, and now we are 300 people, and as I said, I'm the VP of Marketing and I have a team of like 30-something people. So it was a crazy experience these four years.

Guido: Yeah. In our case it's been six years since we started Wolox. As I said, we started with being seven founders, and now I guess we are more than hand ranks 65 maybe, around that number. So yeah, it's been crazy. We were a bootstrapped company. So we started as a close group of friends, and now we are at the point that we start maybe struggling a little bit with the culture and trying to figure out how to go to the next level.

Gonto: Which was the inflection point, at least for you? When did you realize that you're not a group of friends anymore, and now you need to be working on scale?

Guido: Well, that's funny. I guess if I had to throw a number, I would say around, I don't know, when we started being over 40 or 50. But I guess the moment I realized that something needed to change in the way we handled things was when...We started having issues when we did inception process at Wolox. At first, I would say the first 20 employees were all friends or people that we knew from college, people that we hang out with regularly. So after office, we were having a party, obviously there was a lot of alcohol, and so part of the inception was drinking a lot and having fun, but then we realized that, hey, new people started to come to the company and they don't know us. So we need to stop doing this. We need to have a more, a different process and more friendly. So that's when I clicked and I said, "Okay, we need to grow up a little bit. We're not teenagers anymore. We're over 24, 25. We're trying to have a serious company. So I think we need to think more about the process of inception."

Gonto: That makes sense. For us it was a little bit different, because Auth0 is VC-funded. So we're focusing on exponential growth, and for us the inflection point, I don't know how many people there were in the company when it happened, but to me it has to do when you realize that culture is not organic anymore. So when I was reading a book, it's called "Scaling Up," they were talking about something very interesting, which is around the number of connections that you have between people. So if you only have like two people, there's one connection. If you have three, you start to have more connections. If you have four, five, and it grows exponentially.

Something that we ended up realizing is at some point culture wasn't organic, and it was something that had to be a conscious decision. We had to consciously say which was our culture. Actually, not just say it, like get it from the employees of the company, and then starting to be conscious about how to we hire and how do we do different things around culture. So for you guys, how was it when you realized that, hey, we need to start working on this? What were the first steps that you started to take to make culture something important?

Guido: Yeah, and to be honest, I think this is something that we're still doing. I would say that we're starting to have formal meetings to discuss what culture meant for us, the things that we wanted to reproduce, and the things that we didn't want to reproduce. So yeah, I think it became part of the agenda [inaudible 00:05:16] that needed to be discussed. So I think it started about, like, putting in words what everybody thought about the culture but was never written. So when somebody new joined the company that didn't know any of the founders or any other employee, we needed to find a way to introduce that person to the culture.

So I think one of the first formal things that we started to do was formalizing the process of having a buddy, somebody that's going to be the person that's going to walk you through the process of getting into Wolox. So in our case that's a process that you're going to be assigned somebody from the team that's going to show you how, you know, the tools that we use, could talk to you when you need something regarding, I don't know, technology for example, or anything related about having your bank account set up, or anything like that. And the small things like, where do we go to get food or the places that we like to hang out. So having somebody that's going to help you get in touch with anybody else.

Gonto: We took it from a very different perspective. For us, once we realized that culture was important, we actually had an offsite of XLT, which is like the executive team [inaudible 00:06:46] like once a quarter mostly, and the first thing that we started to discuss there is around what are the core values, what are the values that we think that every Auth0 employee has and should have. So we started thinking about it, debating about it, and after like four hours or three hours or something like that, after debating it, we had a draft. But we didn't want to push that, because that's what we thought was the culture, but maybe, like the executive team doesn't really know what is exactly the culture.

So something interesting is that then we have like a company offsite. We all go to some cool place because we're a remote-first company, and we went to Cancun. And something like a really cool exercise we did there is, we presented the values and we asked everybody, they put into teams to say which of the values would they remove, which ones would they add, and which ones would they change? Then we took that feedback and we created a new list of values.

And what we are working on now is to have those values as part of the onboarding. So we actually don't have buddies, and that was an idea that we brought up, to have like a mentor, but we've never done it. So I'm curious to learn from you about how did that work. But for us, what we're working on now is to have an onboarding, and it's like a cascaded onboarding. We have the company onboarding which is going to be about the values, then we have the department onboarding, like marketing, and then we have each of the teams' onboarding, and then a person has to go through that onboarding to start feeling some of the culture and the things that we have here at Auth0. So as I was saying, how does the buddy system work for you guys?

Guido: Yeah, I'm going to talk a little bit about that right now, but I also wanted to ask you about the offsite and the buddies. So you did that with the whole company, I mean the executive team first, and then you shared the first draft of the values with the rest of the company, so to discuss about it. That's cool. We had that sort of, like, retreat with the executive team to discuss basically about the future and about values for the company. And now we're thinking of a way of formalizing that and probably iterating that with the rest of the company. So that's really interesting.

Regarding the buddies, I don't know, I think it's a really good thing because if you're new to a company and you don't know anybody there, it's hard maybe, if you're kind of an introvert for example, to get to know people. So maybe you get to a company, obviously you're going to know your manager and the immediate team that's going to be working with you. So what we try to do is to assign somebody as sort of a mentor, which not necessarily is going to be working with you in the day to day. So it's a way to broaden the connections that you have inside the company. So I think that's really good. And also we try different things, like, I think it's called [inaudible 00:09:48] So you can write your name, and randomly somebody's going to be assigned to you to help lunch.

And that's cool, because after a while and after growing, it's hard to know everybody in the company. So that's a good opportunity to get in touch with other people that maybe don't work in your area. Once you start growing, you start in way different areas, different departments. So for example the marketing team or the sales team and the development team. And over a while, people just hang out with engineers, like engineers hang out with engineers, designers with designers. So I think that's a cool way of mixing the groups and having a more holistic view of the company.

Gonto: For us it's a little bit different because we are a remote-first company, and even though we have headquarters in Seattle, Argentina, Tokyo, Sydney, and London, with people there, we have employees in more than 70 countries. So that's very hard and that's why we thought of a buddy system, because it's even more important, because to us, hang out is actually [inaudible 00:10:55] and that's why, like something that I always do in every call if I can is try to start with small talk the first minutes. And also, sometimes it's hard to work or to ask somebody for something if you've never met them.

And that's why the offsite for us is really important. It's one event, one week, all of the company meets together in a cool place and we all hang out, and we do some sort of activities, like you're saying. We do activities where we get people from different departments to meet, and a really cool activity that I like is, as you say, we don't even know everybody in the company. So we actually separate into each of the small teams, so not just marketing, it could be like growth and demand generation, etc., and all of the company is in a [inaudible 00:11:40] and then each team says what they do.

So we are like half an hour, every team talking about what they do. So we bring awareness about the different things that are being done in the company. Like, something that happens here in Argentina I loved is that one of the engineers comes and they say, "Hey, what is this position, I don't know, professional services appliance worldwide?" And those are the kinds of things that we need to learn, because to me it's important to know what everybody else is doing, and also at least one of the values that we have at Auth0 is collaboration. We always try to help each other. So to help each other, you need to know what they are doing.

And then one thing that I want to mention separately to that, is that we actually published a blog post about our culture and the core values because something that is really, really important to me in culture is hiding. Like, we put so much effort in culture that if somebody is very smart, is very intelligent, but he's a jerk, we would never hire them because that's very important to us. So we actually ask even questions in the interview that are related to which of our core values to see if they have the same, because that's what creates the synergy that we all work together in the same way.

Guido: Yeah, that's cool. I think it's really important to try to know what everybody else is doing. We're not a 100% remote company yet. This year I would say we started to be more remote. One of the guys that wants to try to convert their company to a remote friendly company, because well, maybe we can discuss this in another episode. I worked from China for six months. So that was rough, you know? And that taught me a lot about being remote. This year we started opening offices in Chile and a broader presence in the U.S., and also other Latin American countries. So we started going through the process of improving our remote experience.

So starting to know what everybody else is doing is very important, and that's true. One of the chats that I had with one of the managing directors in San Francisco was, well, you know, when we have an argument and we have that argument through Sumo or Skype or whatever, and you are maybe angry and you hang up, that's the last feeling that I have about the conversation. And when you have that sort of argument with a person face to face, you argue about approach or whatever, and then you go and have a beer, and that's it. But when you're remote and you have that sort of conversation, you end the call and that's it. So that person, when she told me that, I said, "Whoa, that's true. I never realized that." So there is a lot that you lose when you start becoming remote. Then you have to pay a lot of attention.

Gonto: That's what I was going to say. I think that's like everything in life. It's all about being conscious, because if you're conscious about things, then you can change them and improve them. One of the things that we do is, I like to sometimes have meetings without an agenda. Because when you work together, you have these hallway chats where some awesome stuff can come up. So what if we do that? What if we think about that and we actually do that for our company? So something that we do is a no-agenda meeting. Let's just meet, and I don't know, we'll see what we talk about. Sometimes we talk about, I don't know, I would say a soccer match, but I hate soccer. So sometimes we talk about technology or something like that, and relate it to work. Sometimes we talk about work, and to me, it's all about that.

Something interesting but unrelated to this is that I think that from those conversations is where the great things come, because to me, innovation in different areas come from applying things from other companies or other areas to what you are doing. But I think we're going very far away from the culture thing, and I think we've talked a lot about culture, but something that to me is also very interesting is how my view changed.

So I remember when I joined Auth0 and I was like, "Yeah, startups are cool. We hate processes. Let's just ship stuff," it's like...So we used to have a phrase. It was, "Fuck it. Ship it." And we can't do that anymore. Another phrase that Joan, our CISO has a very good phrase that says, "God was able to create the Earth and the universe in seven days because he had no install base." And now we do. We have an install base. We've grown. So how do you feel that your view of companies, startups, have changed from when you started with your cofounders to now?

Guido: Well, yeah, that's true what you say. I remember being a software developer when we worked together. You remember that software. I always focus on coding and the latest framework or whatever. I remember having that feeling, okay, I'm going to start a company, I don't want to be a big, huge company full of processes. We don't need that. And for a while that was cool, and that gave us a lot of agility. But then when we started to grow, and for example, in the first days, we were doing everything. We were doing sales, we were doing project management, we were doing software development.

So maybe one or two people had the entire overview of the company in their heads. So there's less communication that you have to do because everybody knows what everybody else is doing, everybody knows how the full process works. But when you have a sales team and an operations team and they're really decoupled, you need to have a way of handing off from one department to the next one. For example, from sales to UX design, from UX design to the engineers. So obviously we learned the hard way and we keep learning, but that was the moment we said, "Okay, guys. We need to write down what happens between each phase, how do we sell."

I remember also onboarding new engineers. So at first it was, "Okay, hi, you're going to be working with me. Here's the repo, check out the project and start coding. And if you don't know something, ask me and I'll teach you." Obviously that didn't scale very well. So yeah, we had to start thinking about, okay, what are new engineers going to be working on? Obviously the first month it's not going to be as productive as you expect. So you have to teach them your ways of building software, the tools you use, the process, how you create the pull request. And if you're a junior engineer, what a pull request is and why it's important.

So in that case we started thinking about building the trainings. So you're working a toy project and you exercise through that project. So each area had that training and onboarding process. And that's when I realized a process is good. It gives you way of thinking that can be reproduceable.

Gonto: I like particularly two things that you said. One was around, like, people had all of the knowledge in their head. So they just could talk to each other. And at Auth0 we talk a lot about that, which we call tribal knowledge. And something that I feel that happens is that Slack is partly a creation of that, because you have tribal knowledge in your head, and then you chat about it, maybe you share it, but then it's lost in Slack. And that's when we realized that Slack is great for chatting, but it's not great for the other things, and we needed to move that tribal knowledge so that everybody could know about it.

So things that we did there, for example, was like starting a wiki and starting some onboarding. But at the same time, that tribal knowledge generates problems, because when somebody has the tribal knowledge of everything, everybody goes to that person. And that creates that culture of superheroes, and who doesn't like to be a superhero? Who doesn't like to save the situation? And what that means is, I'm the only one who knows everything. So if you want to do something, you need to come through me and I'm going to save the day. So something that I think is very important as you grow is moving from that superhero culture to something that is like organizational excellence.

To me, I hated processes, to be honest, because I felt that they were bureaucracy, that they were like, "Oh shit, I need to fill in this form, it's huge, I don't want to do it, it's a pain in the ass," but then when you start thinking about it, you can create a lightweight process that doesn't create bureaucracy. And at the same time, something that's very interesting to me about this is that the processes are needed, because if you don't have processes, if you don't have a racing model, then how does execution work? Because at first if you're, like, four people, it works. But once you're a 300-person company, how do you execute if nobody knows what they are responsible for, what is the handoff for other teams, when is something done? And all of those things, like the definition of done and the handoff are processes. So sometimes processes sound very bad, but maybe they are not.

Guido: Yeah, and that's funny because I think, what's the first thing that you try to do when you identify this problem? You read a book, you read a blog post, you talk to other companies, and everybody is going to tell you something different. Obviously there is a lot to learn and there is a standard way of doing things, but I think also that processes should be tailored to the company, and that's the hard part, because at least for us it's like, you have to learn what a good process for your culture, for the type of company, and for the type of business that you're in. It's going to help you be more effective. And that, I think, is a journey that you have to go through. There is no way of keeping that. And that's the hard part. I think that a lot of companies struggle with that. I think we are still struggling with that, and it's something that you have to keep improving. It's probably something that is never going to end. So obviously you start building off a solid foundation, but you have to be flexible enough to realize when the process stopped working and needs to be updated.

Gonto: I agree, and one of the funny things for us is how we started to define one of the most important processes to us, which is from product ideation to shipping. Because at first we thought that, like, just shipping a product or feature is like merging the code. But there are so many more things, because auth marketing we need to know because we need to check what is the retention activation, we need to do a PR release, we need to do a blog post, we need to, I don't know, maybe write a white paper, put it in a campaign. Support needs to know because they need to know how to answer questions, CSM needs to know because they need to talk to our customers about the new features to see if it's good for them, sales needs to know so that they are able to send the feature. And all of those handoffs need to be done.

So we started to prepare that. We did an offsite, and it was an interesting activity. So the first thing that we did is we went and we defined the timeline of one of the products that was shipped. And it was actually like three white boards. And it had so many problems. It took one year and it was, like, insane. So after that we actually separated into groups and we wrote sticky notes about which were the problems, and then we clustered them, and then we used that as a unit test. So those were the problems that we had, and then what we wanted to do is, we worked on defining a new process, and then those problems were the unit test to see if that process solved the problems that we had.

I remember that the first version that we came, of that process, actually solved 40%. At first we were like, "That's too low," but then if you imagine that it comes from nothing, doing 40%, that's actually pretty good because if you aim to do the 100%, it will never work, and that's why Matias, our CTO, has a very good mantra that I love, which is, "N+1 is greater than N." So what we are trying to do is work on the problems that we have, what are the problems that we have, use that as a unit test, define the processes, and then keep improving them as we can. And that way it's tied to our culture because it's tied to the problems that we have as the company keeps on growing.

Guido: Yeah, one of the tipping points for us was this year when we started to become a more metrics-driven company. This year was rough. We had to change our entire sales process from scratch. And obviously, now thinking back, it was a really good thing, but at the moment it felt really chaotic. It's like, we need to improve how we are reaching our goals. We need to completely destroy what we're doing now and think about something completely new. So the first thing you say is like, where do we start? We know what the end goal needs to be, but how do we get there?

So a couple months were rough and we had to tell everybody, "Okay, we're going to change how we're working. So everything is going to be different from now on, and we have to move fast." That's the thing. You don't have enough time to, okay, I'm going to think about this process and see how it goes, and take my time to iterate. No, you have to react really fast. So after a couple months we were able to become a more metrics-driven company, and we still have to do a lot in this area, but it's really important when you start thinking about the metrics and you start thinking how the things you do impact a particular metric and that ties to the objectives of the company.

Gonto: Yeah, so one of the things that we're in the process now is, so we are working, and we were working very hard on execution. We're actually using our own model about goals and OKR's, it's like a mix of it. But the main idea is that every person in the company has some key results assigned to them so that they know what to do, and those key results have to be measurable. So it's either a metric or a delivery or a milestone or something. So that way we're cascading something, and that's our process. Our process is like, XLT, the executive team defines the goals, they define the key results, then each of the department leads goes with their leadership team to define what are their goals, what are their key results, and then each of them goes to their teams and to their teams and to their teams, until everybody has goals, everybody has objectives, and everybody has key results.

And to me, the good thing about that is that then you know how you, an individual at the company, are moving the company forward, because you know how your key result is linked to the objective of your area, how that's linked to the objective of the department, how that's linked to the objective of the company, and how that's going to drive the company forward. So I agree 100%. And one more thing, unrelated, that I liked is that you are saying that you had to move fast. I sometimes feel that we are on a plane at like full speed, and we're changing the engines, we're changing the windows, we're changing everything while we're going. And even though we need to do that because it's around exponential growth, it's innovation, at the same time something I like is, like, Chris Peck, our head of product, he sometimes says that to move fast you sometimes need to move slow.

That's something that we are starting to accept, because when you start doing things like everywhere, it's a mess. And that's, to me, where processes fit. Processes make some things move a little bit slower, but greater quality, and then overall it's faster. So when we did this exercise that I mentioned before, I remember that to ship a feature fully, we took one year and a half, and we were always running. And when we stopped running, then maybe we can ship it in one quarter. So how is it that by going slower, we're actually going faster?

Guido: Yeah, that's weird. The other thing I wanted to discuss, maybe this is a discussion for another episode, but how do you pick the correct metrics? Because if you pick the wrong ones, you maybe encourage behavior that you don't want to foster in your company. And maybe you don't realize that until it's too late or maybe after, I don't know, a couple months or next quarter. Maybe you hit your sales goals, but that affected the culture in some way or how the team relates with the operation teams. So that's tough. Picking the right metric is really, really hard, and I don't know if there is a right answer for that.

Gonto: I think that for picking metrics, you're always learning. Something that I think is the first thing that should be chosen is, what is the north star metric? Like, what is the north star metric of the company? And that to me is a metric that's linked to activation and retention, because if your acquisition is working great, then activation and retention metric will work. Then if your activation and retention is cool, your revenue will grow. But at the same time, you cannot act or do changes based on a revenue metric, because if you're like us, a B2B, the sales cycle might be longer. So we might take, I don't know, 90 days to sell something. So we can't use that metric to understand if we're doing okay or not. So we need a proxy metric. And to me, the north star metrics are very good proxy metrics. But having said that, I think we're always learning. I remember our first funnel for activation and retention in the features and the usage. And at first, when we finished it we thought that everything was going down and that the company was going to go to shit, because everything was going down.

And then we realized that the problem was that we weren't being fair, because we were giving the people who signed up one month ago, one month to get, like, features and things approved and done, and then we were giving the people from yesterday just one day. So once we realized that, we changed that to actually start showing the metrics based on a cohort view, because what that led us to do is, like, from the people who registered in March, what happened the next month and the next month and the next month? We're giving everybody the same chance to get to something, and at the same time, by having one line per each cohort, if you make changes, you can see the differences in conversion rates, or if something is going up or down. So now I'm a big fan of cohorts, and I think that's a thing that we need to do everywhere. But probably, like three months, I'm going to say, "Oh, the cohorts can do something, and then there's one more thing."

So to me it's not about picking the ideal metric. There's no such thing. To me it's about continually be thinking about evolving about which are the metrics that matter.

Guido: Cool. I think this was a good start, I'd say. Obviously we could be speaking for the next two hours, but I guess it's a good stopping point. Maybe we can continue this topic next episode, or, I don't know, maybe we can talk about a completely different thing. Who knows.

Gonto: Something that I would like is, this is the first time that both of us are doing a podcast. And I really value honesty and feedback. So if you guys have any feedback, you can tweet it to us @TheICCast, or you can also tweet it to me, @mgonto or you, @guidomb. And we'd love to hear feedback on what did you like, what didn't you like, what topics do you want us to cover, and any other things.

Guido: Yeah. That's cool.

Gonto: Thank you guys for listening. As we say in the first one, we hope you guys enjoy the show.

Guido: See you next time.