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The Efficient Startup

August 1, 2017

How being efficient can help you move 10x faster

Your team is your company’s most crucial asset. Every investor will tell you this. The first thing they look for is a solid team, and you’ve probably heard the adage: “ideas are worthless — it’s all about the execution.” Founders have ideas but as much as some people want to do it on their own, the best founders are the ones who assemble an amazing group of people who help you execute on your vision.

Why am I emphasizing this point? Because it deserves more attention.

The Lean Startup is probably the most-cited and oft-practised methodology for startups around the globe. Yet it completely ignores the most important ingredient for execution: your team. You can build-measure-run experiments all day long, but what if you could do them 10x faster?

We all know that building a startup is like running a marathon. But what if you had a bike? You might say that’s cheating, but it does get you across the finish line faster. The same amount of energy exertion results in far more distance traveled. Silly analogy, but that’s what an efficient team should feel like.

I’m deliberately avoiding the metaphor a “well-oiled machine” — not just because it’s overused, but mostly because it conjures up an image of a magic vending machine; the kind where you put 1 dollar in on the top, and get 3 dollars out at the bottom. That’s often how founders and investors think about startups. While building an efficient growth machine is awesome, it’s only a small part of what the Efficient Startup is about.

If you’re like me, you’ve had conversations with more than 100 investors during the time you’ve been a founder. You might agree that those conversations will bias you subtly towards adopting the frameworks of investors, and what they believe a successful startup should look like. Investors will always ask you for your metrics: What is your CAC/LTV ratio? What is your MRR growth rate? Churn rate? And you’ll inevitably want to chase those metrics because of that.

Too many founders are pressured to chase these metrics faster than ever, and they end up throwing heaps of money at the problem, or cutting corners on their culture.

I know it’s hard not to chase those metrics. We just need to be very aware of that innate cognitive bias of conformity, especially when you’re in a position of weakness, like when you’re begging for money. I’m not saying that those are not important metrics; just make sure you grow them sustainably and efficiently. Too many founders are pressured to chase these metrics faster than ever, and they end up throwing heaps of money at the problem, or cutting corners on their culture. Resist the urge to chase. Festina lente.

“The Efficient Startup” is a series of articles dedicated to building an efficient startup. At its core, it’s about building a culture of efficiency, and having your entire team live by the philosophy of efficiency in every little thing that they do. In this series we will expand on the numerous aspects where this philosophy can apply, both tactical and strategic. It is operational, it is cross-departmental, it is personal. When you run an Efficient Startup, it should feel like you have the “efficiency protein” run through all your veins, feeding every organ, every bone, and every cell of your startup.

Let’s quickly look at why efficiency is such a powerful thing:
We all know that a happy employee is a productive employee. If you were to graph an employee’s output over time, his or her productivity will dictate their slope:

 

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Employee productivity is only part of the story, because it’s individual. Each employee will have their own productivity curves. An employee’s productivity can increase over time as a function of their learning curve:

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Increasing one’s productivity over time will have great effects on a person’s output.

To get the entire team’s output, you simply add all individual curves together, and you’ll end up with a similar output curve as the one above.

Now, what if you could increase the slope of the productivity slope of every individual over time?

Increasing individual productivity is good, but increasing the entire team’s efficiency is that much better! It’s not about how fast one person can code, it’s about how fast your entire team of engineers, designers, product managers, marketers, sales people, customer success, all work together to achieve one common goal. Here’s what that would look like:

 

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Your team’s output curve over time just became exponential! Obviously the graphs above are a bit exaggerated — as both your efficiency/productivity curves should flatten out over time — but it does illustrate the tremendous impact of the efficiency lever; one that should not go ignored. For the fellow nerds among us: your team’s efficiency curve is a second-order derivative of your team’s output!

The Efficient Startup is a team that understands the importance and the impact of efficiency. It’s a group of individuals who commit to being efficiency in everything thing they do — both big and small.

In my case, my commitment to efficiency shines through even in the most mundane of tasks. For example: I like doing the dishes with the minimum amount of water necessary — I can’t stand a running tap! But my commitment to efficiency has also influenced my life in a much bigger way. It’s the reason why I quit investment banking to start Routific.

Efficiency is so deep-rooted in our DNA that it manifests itself in everything that we do. It’s not just our algorithms that produce more efficient delivery routes for our customers; there are also efficiencies to be gained in user-experience. Internally, it changes the way we think about marketing, how we go about sales, even how we think about our fundraising strategy. On the day-to-day it extends to how we write code, run our meetings, design features, and prioritize our road map.

The Efficient Startup is a team that understands the importance and the impact of efficiency. It’s a group of individuals who commit to being efficient in everything thing they do — both big and small.

By no means am I proclaiming Routific the world’s most efficient startup (yet) — likely far from it! But we do commit to the ways of an Efficient Startup, and as we continue to experiment and learn, we want to share our learnings with you.

The first few posts will be about building a company culture: the cornerstone upon which you build your team. These are prerequisites for transforming your company into an Efficient Startup. After that we’ll discuss the efficiency of daily operations — such as running efficient meetings. The other themes we’ll discuss will include efficient engineering practices, sales and growth strategies, fundraising and profitability, delivery logistics, and whatever else you’d like us to cover.

To get us started, read our first post on The Importance of Startup Culture. We’ll be sharing new stories on efficiency every other Tuesday — stay tuned.