During the company formation process through shortly after the official launch day (i.e. the founding team’s start date at OCV company), OCV will work with the founding team to complete:
Launch Day ChecklistCompany launch process and what to expect
Typical company launch process takes 6 weeks at a minimum. Following:
- Founder(s) to sign indicative offer letter (official launch kick-off)
- Legal / incorporation process: 2-3 weeks
- Founders will need to sign engagement letter with legal counsel
- Bank account setup and funding (after regulatory filings): 1 week
- Founders may be required to complete KYC steps for bank application
- Founders to complete common share purchase prior to OCV SAFE funding
- Founders to send in their 83b Election to the IRS and confirmation with Legal Team
- Corporate credit card & EOR setup (after bank account is funded): 1 week
- Founders to sign EOR contract and complete founder onboarding in EOR system
- Founders may be required to complete KYC steps for corporate credit card
- Other core business systems setup / purchase founder equipment, etc. See
Investor and founder relationship
Even though OCV companies operate differently from the traditional venture-funded model, founders are still the final decision-makers. As CEO/CTO, you run the company. OCV does not override the decisions of the highest C-level person at the company.
Company launch process and what to expectInvestor and founder relationshipA short primer on how VC-funded companies workOCV Founder Onboarding ProgramAsks of OCV FoundersHabits of a successful OCV companyAccountability Do things that don’t scaleIterationBuilding a culture of shippingUrgencyGrowth solves all problemsY Combinator Application
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OCV provides guidelines and suggestions intended to help you be successful and are often informed by previous experience. Our handbook is a living document is continuously updated with those recommendations but OCV is constantly adapting to new information. Giving OCV visibility into decision making can help us provide the guidelines and suggestions we think will be informative and make you successful. Either you take the advice, or you don’t.
Ultimately, you are accountable for the decisions and outcomes of the company. As a leader, all decisions and outcomes stop with you. The CEO makes final decisions and can never point up. You don’t want to be in the position where you are explaining to your reports that the reason you did something is that someone higher up said to do it. For example, a company has layoffs and the CEO says “the board made us do it.” That would be a very weak stance to take. Either you own the decision or don’t do it.
A short primer on how VC-funded companies work
Venture-backed startups are different from traditional companies that focus on profitability. Taking on venture investment is analogous to powering your business with rocket fuel - your growth is expected to skyrocket, at an astronomical pace. Sustainable unit economics is important (for example, spending more than $1 on customer acquisition to generate $1 in revenue is bad business), but VCs are not looking for profitability if the business supports strong margins and you’re investing in growth (i.e. engineering for new products and sales and marketing).
Assuming the same revenue base, a business that demonstrates high growth (even with negative profitability) will recieve a higher valuation than a business that grows at a lower rate even though it’s profitable.
When a company takes VC money, the potential outcome for that company in an exit can be significantly larger, but it also comes with a big risk of failure, and expectations of driving on large returns (think IPO). Founders should be ready to sign up for a big vision for their company when taking on venture investment. While the average outcome of a VC backed company may be higher, it's also important to consider the median outcome, as the vast majority of companies end up losing their investment. Starting a venture backed company is a big commitment, and it's important to evaluate if it's the best path.
OCV Founder Onboarding Program
During the first two weeks after launch, OCV Team will run through a structured onboarding module covering:
- OCV General Process Overview
- Finance Operations
- People Operations & General Systems
- Hiring / Recruiting
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Currently, the onboarding sessions are designed for a specific company (”NewCo”) launch and will be scheduled based on OCV & NewCo’s availabilities. However, founders of recently launched companies are welcome to attend these to clarify any process questions and catch up on the latest OCV guidance. These sessions will be recorded and follow our async meeting practice (Meeting Format & Etiquette). See guidance from OCV GP below:
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Asks of OCV Founders
OCV values speed and the spirit of iteration. We’re constantly learning & improving our processes to increase our velocity and adapting to changes. We have high growth targets just like our companies.
To operate effectively in our environment, we ask our founders to:
- Adopt a handbook-first, all-remote (async) culture as quickly as possible
- Trust that there are careful considerations behind each OCV recommendation. If something isn’t clear, please ask why first
- Keep an open communications channel. We work with teams across countries and cultures and understand that words can be lost in translation. Open communication will help us better appreciate each other’s concerns and come up with the best possible solution together
- Be patient with us as we’re adding materials to our handbook everyday
Habits of a successful OCV company
Accountability
Accountability means being responsible for your actions. When you say you’re going to do something, you do it. As the leader of a new company one of your most important jobs is to set and meet company goals. OCV is your accountability partner. We’re here to help you learn to set and reflect on your goals.
OCV companies set ambitious goals, and it takes dedication to action to achieve them. Founders are accountable for setting the company's direction, pace, and progress. It’s up to you to set company goals, consistently reinforce the company values, and set the tone and pace of progress. We expect founders to set an ambitious goal every two weeks and achieve 70% of it.
If goals aren’t being met, values are being ignored, or progress isn’t made, you are accountable for fixing it. When the suggestions made by OCV are not aligned with the direction the decisions made by the highest C-level person at the company, any resulting consequences should be resolved by the company. OCV will expect companies to take accountability for any mistakes: YMYC - your mistake, your cleanup.
Avoid framing company objectives in terms of what your desires are: “What I want is”. "What will benefit the business is" is the preferred approach for business leaders when discussing company objectives, as it directs the focus towards actions that will contribute to the businesses overall success.
Do things that don’t scale
“Do things that don’t scale” is the opposite mentality of “build it and they will come.” It means that in the early stages of building a company, founders will need to do a lot of manual work to build momentum that will make your start-up take off. It’s the most common advice given at Y Combinator and can be the difference between success and failure.
Paul Graham’s article on the subject states, “Almost all startups are fragile initially” and the question to ask of early-stage startups is not “is this company taking over the world” but “how big could this company get if the founders did the right things?” And the right things may seem counterintuitive.
Do things that don’t scale can look like:
- Solve problems manually until you can automate them. For example, recruiting users manually. You can’t wait for users to come to you, you have to go find them. The same is true for early marketing.
- Growing 20% WoW. Lean into the power of compound growth. Rapidly compounding growth from an initial customer base that is lower can drive large numbers of users and revenue.
- Delight your customers. Go out of your way to make the customer experience exceptional. Writing handwritten notes may note scale but adopt the mantra that “if you go out of your way to make existing users super happy, you'll one day have too many to do so much for.”
- Exceptional attention to users. Over-engage with your early users and aim to get something in front of users early. Feed the feedback loop. “It's not the product that should be insanely great, but the experience of being your user.”
- Focus on a deliberately narrow market to start. Get really good a serving a specific market to start and then expand. If you try to solve everyone's problems, you end upsolving no one’s problems.
Iteration
Iteration means making many rapid, small changes and adjusting based on feedback. Iteration is often confused with revision. The difference is that iterations are publicly released, and revisions are privately reviewed. Iterations are live versions of something that real users can interact with.
It’s very natural for ambitious, smart people to scope too big and fall into analysis paralysis and not be able to ship. It’s good to have a product vision, but you have to build momentum through progress. Use milestones to break down the big-picture vision into smaller, shippable pieces. It might take nine months to create a decent, minimally viable product, but that doesn’t mean you don’t ship any code for three quarters.
Building a culture of shipping
The success of your startup is dependent on your ability to learn how to ship early and often. Growth is the most important metric. Stability will come over time as the company grows.
Several distinct problems manifest themselves as delays in launching: working too slowly; not truly understanding the problem; fear of having to deal with users; fear of being judged; working on too many different things; excessive perfectionism. Fortunately, you can combat all of them by the simple expedient of forcing yourself to launch something fairly quickly. — Paul Graham, The 18 Mistakes that Kill Startups
Create a culture of shipping by:
- Setting a north star. A 20% growth every two weeks target helps keep everyone focused.
- Encouraging smaller iterations.
- Prioritize delivering on the company goals. Strive to achieve and exceed goals rather than accept complacency if they aren’t met.
Break down work into two-week sprints and ship something at the end of every two weeks. Suppose it’s going to take three months to build a thing—figure out how to ship it in two. Cut scope until you’ve landed on a version that can be done in two weeks. The product doesn’t need to be usable yet.
Start by making a list of small improvements you can make in the next two weeks that will get you closer to your goals. A bi-weekly shipment could include bug fixes, a video walkthrough of the codebase with current users, and improved documentation. Think about the smallest possible improvement you can make and do it.
Urgency
Startups are designed to grow fast. Growth and speed are what define a startup, not simply founding a company. Cultivating a sense of urgency for yourself and the company at large is one of the most important culture-defining elements you can impose as a founder.
Having a sense of urgency means you don’t wait to do things. It’s a proactive, action-orientated mindset versus a reactionary mindset. To cultivate a sense of urgency, set the expectation that your company addresses situations as soon as possible and doesn’t wait to take action.
Growth solves all problems
“If you get growth, everything tends to fall into place.” Startups grow quickly by design Startups need to be growing to remain a startup; it’s a momentum play. Not all new companies are startups. Startups gain momentum quickly and use that momentum to overcome obstacles. Don’t lose momentum.
Being a startup is an unnatural act. There will be problems that arise that you are tempted to slow down to resolve but mostly you will need to find short-term, quick fixes and come back to the problem later because you need to get to scale to solve the problem. The only way to overcome a problem later is to grow fast now.
If you grow as a startup, you can hire and fundraise to solve the problem. If you stay the same size, the company isn’t able to hire and fundraise and the company will ultimately no longer be a startup and likely fail. Whatever you are facing now, if you grow you can attract more money, automate more, hire better people, and overcome it later.
Growth is measured by growth rate: the ratio of new customers (the customers at the end of a period less the existing customers at the beginning of a period) to existing ones. You need to be constantly growing your new customers at a rapidly accelerating rate.
Not all growth is created equal. For example, if you are trying to get enterprise customers, getting 1 or 2 and growing slowly ($500,000 each) is very different from having 2-3 active free users and growing from that.
Some examples of “growth hacking” your way up are using content marketing and community forums (Hacker News, Reddit, etc.) to gain product awareness with big audiences and contributing to the open source project you’re building around, and helping out the community to gain their attention and favor. Doing things that don’t scale like writing a blog post a day and dedicating the majority of your engineering resources to community support may not be sustainable in the long run, but they will get you growth now.
Y Combinator Application
Y Combinator is a startup accelerator program that provides seed funding, mentorship, and resources to early-stage companies. It is widely considered to be one of the best startup accelerators in the world.
Review some of their essential advice here.
OCV strongly encourages our companies to apply for the upcoming YC batch as soon as practicable. There’s a lot of learning in the application process itself. OCV companies which have a CEO in place should submit an application within one quarter.
- Some of the types of questions asked in an interview with YC: https://jamescun.github.io/iPG/
- Startup School Resource for Founders: https://www.startupschool.org/curriculum
- YC Application Practice Pitch
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Additional Resources:
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