461: The Messy Middle

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Steli Efti: Hey everybody, this is Steli Efti.

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Hiten Shah: And this is Hiten Shah.

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Steli Efti: And today on The Startup Chat, we’re going to talk about the messy middle. Or what I like to call it, the awkward teenage years of your business. So we’ve talked a ton about the super early stage days like how to come up with an idea, how to validate an idea, how to build an MVP, how to get your first customer, your first 10 customers, how to hire your first couple of team members. Like we’ve talked a ton about kind of the super early days as founders in your startup. And a lot of the topics that we discussed kind of touch all stages and phases of the business. But today I wanted to talk to you about what the most awkward time, and probably the the largest phase, or maybe not the largest, but it’d be a kind of significant phase, which is the phase in your company where your business is up and running. You have customers, you have customer growth, you have a bunch of team members. And kind of you’re not in the hyper early pre product market fit. We don’t know what we’re doing. We don’t know who’s our buyer. We don’t know if we’re going to ever generate any money or how to market and sell and grow this thing. You’re not in those early days. You’ve passed through that stage of your startup, but you’re not quite yet at a place where you just add hyper scale and hyper growth or where you’re now a super mature, super stable business. You’re kind of in the awkward middle phase. And I wanted to chat with you a little bit about kind of, we’ve both gone through these phases with multiple businesses. What do founders need to know about the messy middle? How do they need to prepare for it? What mistakes to avoid? I thought it’d be fun for us to unpack kind of the most awkward phase of your business basically.

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Hiten Shah: Yeah, so Scott Belsky and his now I think Chief Product Officer at Adobe, he wrote a whole book with the title, The Messy Middle. So we should definitely give him a shout out. Bumped into him somewhere the other day in the morning and I didn’t recognize him. He’s looking a little different these days. Looking good though. And so yeah, wanted to shout out. Great book, you should read it. That being said, we’ve got our own thoughts on this, so we should share our thoughts that have probably very little to do with what’s in the book, even though the books great. And so we’re going to focus on that. But I really like the naming, The Messy Middle, the teenage years like you said. It’s really crazy how even if you’ve done it before, whatever company you’re working on now, looks different than the one that you worked on in the past. Even if you’re in the same market building similar product, just looks different. And you might be literally, have spent a lot of time creating a mess to be honest. The reason it’s a messy middle is not because the middle is messy, it’s because what got you to the middle usually means you created a mess. And so the state of the business, and you can be self funded, you could be venture backed, doesn’t really matter. You tend to have scrambled, if you want to call it hustled, you want to call it been really scrappy, to get to [inaudible] profitable or to get to product market fit or to get to some, I wouldn’t even say getting to product market fit is as important as having some resemblance of a business. Something that people want to use, pay for, whatever what you’re looking for to hit that milestone. It was just messy. And from personal experience, it’s usually you’re really just scrambling to figure out what is going to work. And one of the things that I’ll throw out and say is one of the messiest that I’ve seen more recently is your tech gets really messy. And you produce a lot of tech debt. Even if you’re conscious of tech debt. Sometimes the bigger issue is the people who are helping you from an engineering standpoint, even if you’re the engineer early on, you’re literally just scrambling and tweaking things and changing things on a weekly basis. And some of it’s based on actual customer information and data and things like that. Some of it is just literally your intuition and where you think things should go. So it’s a lot messier time than when you have even more customers and you’re able to actually take more signal from them or figure out kind of where the market is because you actually already know what market you’re in and who the customer is you’re serving. So it’s really messy. You’re either changing your customer a lot, you’re changing your product a lot, you’re doing different types of things in the company that have no structure and aren’t formalized or repeatable yet, but they might be working. So I’ll give a few examples from my business. So at my current business, FYI, we’ve accrued a lot of tech debt. Some of it on purpose, some of it not. And as we’re going from what I call a single player product where you can sign up and get a lot of use of it without sharing what it is because you can go look at it, it’s at usefyi.com. But that’s not the point. You can get use out of it as a single player, as a single person inside of a company or even personal use cases. As we’ve been developing and learning from those use cases what teams need, what companies need, which are a little different than teams, we’ve had to reevaluate all of our code and the things we’re doing because there are things that we need to do going forward to support the team and the company use case that the current tech just wasn’t able to do. And it wasn’t anyone’s fault. It was just we had a scramble to get to this thing that was useful for individuals. And now we’re not even scrambling. We’re a lot more structured, lot more thoughtful, we have a lot more methodology on how we’re iterating, but we’ve had to rewrite pretty much most of the product. And it’s because what got us to this point isn’t what’s going to get us to the next milestones. So I think that’s a big one on tech debt. I’ll say one more on my business today. So we’ve been doing a lot of marketing in terms of like learning how to produce content, learning how to sort of use social, specifically LinkedIn and Twitter, as like ways to get traffic and ways to kind of get in on different conversations is the way I like to say it. And a lot of that for the longest time, until maybe six months ago, maybe a little longer, we were just not very structured about it. And we were just basically doing what we know how to do, which is we know how to write, we know how to communicate, we know how to like put things on a blog and stuff like that. It wasn’t very structured and it wasn’t like the systematic and we didn’t have like a process for the content. We were just writing a bunch, coming up with topics, more ad hoc, posting on social and we’ve gotten so much more systematic about it. It’s gotten a lot more cleaned up. We’ve actually structured some of the help that we’re getting on it, whether it’s contractors or the images that we produced for it. Everything’s just gotten better. Even launching on product for us has gotten much more systematic, much more better as we’ve done it more. Even the way that we do certain, we build certain tools and launched them on product as a part of our marketing, part of our sort of inbound marketing strategy. And even that’s gotten better. But it’s been really messy. And so it’s almost like you’re picking off messes and basically picking and knowing, I wish I was more conscious about this in the past. But really now I’m like okay, I look back and I’m like, okay, what’s a mess? Does it need to be cleaned up right now or not? If yes, clean it up, if not, wait and let it be messy.

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Steli Efti: Yeah. All right. I love all of this. So here’s some of the experiences that we have gone through and some of the lessons learned that I think could be valuable to share. So I couldn’t agree more with kind of the debt that you accrue. One way that I think about it is that, I mean all of life is a balancing act. Of business, very much so as well. And I feel like one of the biggest challenges that you have is in the early days, you have to make very distinct and specific choices to start getting movement and progress and eventually momentum going, right? It’s very hard to kind of start something from nothing and build up momentum for that thing. And you’ll have to make very kind of shrewd decisions that at times will be best for the short term but not so good for the long term. And then as you build more momentum, you hopefully start shifting from being 80% short term focused and 20% longterm to like 60 40, 50 50. And eventually at some point that ratio has to switch where almost most of the things that you do have very longterm investments and just a few little things are short term investments or mid term investments. And like tipping the balance from being hyper focused on short term results to midterm to getting really hyper focused on longterm. It’s a gradual thing and it’s very hard to get the timing perfectly right for this. So a lot of times what will happen is that as your company is succeeding, one of the curses of success, or doing anything that works, is that you’re going to develop a bias to want to just keep doing the thing that works. And you are also going to develop a bias to not be doing the things that weren’t good to be done in the early days. But that’s the biggest trap, right? So you know a bunch of stuff that was working in the early days when you had zero customers, well now you have 500 customers, you have a thousand customers, and those same strategies will vary. It’s very unlikely that the same strategies that got you to your first 10 will be the best ones to keep hyper-focusing on to get from a thousand to 10,000. You’re probably going to have to expand what you do or change what you do significantly. Getting that balancing act right between what are the things that we want to hold onto versus what are the things that we need to let go of and what are the new things we need to get good at? I think that kind of a balancing act, those choices are really the tricky choices that you have to make. In the metaphor that I use oftentimes when I talk about this with my team is the kind of awkward teenage years. And to me that’s such a great metaphor because when you’re a teenager, you’re neither an adult nor a child anymore. Right? And that’s what sucks about it. That’s the tricky part about it because most teenagers, most of us when we went through our teenage years, we wanted to act like children when convenient, but be treated like adults in many areas. And I think that that’s what I see in a lot of businesses that go through the messy middle is they still want to act exactly the way they acted when there were three co-founders in a dorm room or in a garage or in a small apartment. They want to keep whatever was beautiful about that kind of light, early days when everything was possible. You were brainstorming, you didn’t have to have any process, any meetings or anything really. It was just a bunch of friends building something cool. They want to keep the same processes going and kind of the same reality going, but you’re not a baby startup anymore. You’re not a child, you’re not three friends building something. Now you have employees, you have customers, you have technical debt, you have infrastructure, you have scale, you have revenue, you have losses, you have profits, you have bank accounts, you have taxes to pay. You’re just not in that phase anymore. So you can’t act like that. But you don’t want to act too adult either. Now just because you went from a three person team to a ten person team, it’s probably still not the right time to hire a 20 person accounting, finances, and tax team, right? Like you don’t want to act too adult and be ahead of the curve and kill things with acting like you’re IBM or Microsoft and building the same processes and the same infrastructure because that’s going to kill you, the weight of that, because it’s way too far ahead of where you are. So finding that balance of like growing up a bit and acting more adult and asking yourself what is right for the phase team and stage that we’re at right now and where do we need to step up our game versus what are the areas that we want to still hold onto when it comes to our energy, our creativity, how casual we are. How do we make sure that we don’t grow up too much or pretend we’re too adult too much but we do step up our game. I think that’s really the tricky part. And for us to give a very specific example, I mean we went through all the same stuff and this is a never ending road of building up technical debt versus paying it. Again, even still today, there’s a never ending negotiation, a healthy negotiation that’s going on on like how much of the technical debt that we’re accruing do we want to pay off monthly? How much would we want to invest in infrastructure and in speed? How much do we want to invest in fixing some of the older parts of our code, so how much do we want to invest in going back to all the parts of the product and re imagining it or improving it, making incremental improvements versus how much do we want to invest in innovation, new products, new features, new things that we do that could be revenue drivers or growth drivers. It’s a never ending negotiation. And we went through some of the same and similar challenges that you have. I think one big more mental or philosophical challenge that we went through when we hit the kind of messy middle was being dogmatic about not wanting to play the playbook. I’ll call it that, right? Which is there are a bunch of things that companies have done once they hit our level of scale to get to the next level of scale. A lot of these are kind of very much … There’s a playbook when it comes to growing a company, scaling a company. And there’s ways to break some of those rules. But there are some common rules that a lot of companies applied. And they applied it for good reason. And they work for good reasons. And I think that we were for too long, kind of too dogmatic about not wanting to play the playbook, not wanting to go through some of the things that companies do that were at our stage to get to the next stage. Because I don’t know, to some degree, we just didn’t like some of these activities. It was just being childish again. Like not doing what you’re supposed to do but wanting to do what you want to do. Like a little child. Just being like, but that stuff is no fun, but we never had to do that stuff. Why do we have to do it now? Or even worse, everybody’s doing that stuff. We don’t want to do what everybody does. And I think that that’s very kind of a very immature stance that we took for too long. And it really slowed us down until we kind of snapped out of it and went okay, like we need to hold onto what makes us unique. But there are certain things that just make sense. So let’s just go and do them. Let’s not be little children about it. And it’s just like grow up and tackle these things that will make this business better and that will help our customers and help us grow. So I think that that was a really big kind of mental block that we had going through it. And one last thing I’ll say before we wrap up the episode. One thing that we also, that I kind of learned, is that the way you build a team and the type of people you want to attract to your team need to also kind of fit the state that you’re in. And so the early days you might want to hire a lot more kind of hype entrepreneurial or hyper, you know just people that have massive motivation, very productive, get shit done, generalists. People that can jump on different problems and figure them out even if they’ve never tackled it before. There’s a certain type of person that will do super well as a team member of yours in the hyper early days. And then there’s people that will do really well hiring them when you are very late stage and kind of a scaled business. The messy middle part, one of the biggest things that we’re looking for and that I think you need to look for is for people that are really resilient. Like for those kinds of really people that have had some experience and have done some early things, some late stage things, some middle stage things. And love coming into a mess. That where they seize opportunity, opportunity to really have impact without being in the early stage where everything is unclear and we might work on this for two or three years and not accomplished anything versus the super late stages where your impact will be really minimal. They want to come into a stage where there is something that is ready to be scaled. If you can just help clean up the mess and kind of focus and utilize the opportunities and the foundation that has been built and that are excited about that, but that are shrewd about understanding that it’s going to be kind of a tough phase to through that’s not going to be that glamorous internally. And the way that I described that to people oftentimes is talking about like the middle part of a marathon. At the beginning you’re probably full of excitement when you start running a marathon. It’s finally there, the day you’ve trained for, dreamed of. And now you’re starting off, you have all the energy, all the passion, your dreams, the excitement, the adrenaline. That’s an awesome phase. The final phase might be painful, but you know you’ve basically done it and all you have to do is keep going. You can see the finish line. And seeing the finish line or knowing, sensing that the finish line is around the corner, that’s super motivating. Even if you are kind of exhausted and everything, you just have to keep going. You’ll hit it. But the middle part is probably emotionally, mentally the toughest to break through because in the middle part of the marathon, you’ve already run a lot. You’re probably now in pain, you probably have gotten some small injury. It’s probably raining. There’s like all these magical reasons show up for you to want to quit. And that’s probably where you’re in a dialogue that’s the strongest telling you this sucks. I should try another day. I might get hurt. I have this injury, it might get worse, my legs, this, that, and the other. You have all these good excuses and good reasons to quit and you’re so far from the … You only hit the middle. So you know you have to do it all over again. So it’s just mentally really, really draining and that’s kind of a perfect spot to want to quit or to go overly negative in your head and just see everything that sucks and just be overly critical of everything. And I think that that’s a very good metaphor for that stage in a business. Certain people will get really crushed by the messiness of things and they will get overly negative and just complain every day about everything that’s messed. All the copays is messed up and these customers complain about this feature we don’t have and this marketing channel isn’t working, we don’t see growth in this. And we have a difficult time hiring that person. And they’ll see all the problems because there are going to be many. And they’re going to lose the sense of purpose and they’ll lose the excitement and motivation that they had in the early days. And so you need people that are really committed and resilient and want to go through the pain. Expect some of the messiness and the pain and have the discipline to push through it and accomplish kind of the finish line together. And so being careful in who you hire during that phase I think is really, really important because if you hire too many people that will drown during this phase and be overly negative and be kind of crushed by the messiness of everything, it’s going to really, really impact your success or your failures during that phase.

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Hiten Shah: Yeah, I think it’s just a huge thing. It’s not talked about enough. There’s a whole book on it though. It’s so weird that everybody hits this. Everybody. And it’s just not talked about this real weird phase of the business. There’s so many aspects of the business that could be different. I think you hit on a whole bunch of them. I hit on a bunch of different ones and gave some examples of what we’re dealing with right now at one of my companies. I think that’s it. Watch the messy middle. Grow up appropriately. Just get through puberty really quickly. Recognize what you’re going through and it’s okay if it’s a little messy, like this is unfortunately normal.

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Steli Efti: Yeah, you’re not alone. And as always, if any of what we discussed today resonated strongly with you and you want to share your story, your struggles, get any more specific advice, just send us an email. We always love to hear from you. Hnshah@gmail.com, steli@close.com. That’s it for us for this episode. We’ll hear you very soon later.

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Hiten Shah: Later.

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