As a startup founder, until you have product-market fit, your top priorities are your product, customers, and team — nothing else matters. At the same time, it’s critical to establish a basic reliable operations stack to run your company.
Here’s a high-level framework for thinking through the core pillars of your company operations and making sure you’re setting yourself up for long-term success.
The 5 pillars of startup ops
You’ve narrowed in on a product idea and decided to start a company — what’s next? It’s time to think through five core areas of company operations and make sure you’ve established groundwork in each:
- People
- Legal
- Finance
- Customers
- Data
As your company scales, each of these pillars will likely become full-fledged organizations with complex toolstacks and processes. The goal here in your earliest days isn’t to create all of that structure now, but rather to ensure that you have your mission-critical bases covered and that your business has the foundations to enable that scale later on.
1. People
You may not have a large team yet, but it’s important to prioritize your people operations from the beginning — even if it’s just you and your cofounders for now! Thankfully, you don’t need to have a ton of prior knowledge to set up payroll and benefits — software solutions like Gusto can walk you through the whole process.
Many founders prefer an even more hands-off option and use a PEO (Professional Employer Organization) like the one offered by Rippling, which manages all of your HR for you and can give you access to resources and preferred rates you might not otherwise be able to get at your scale. If you’re thinking about building a global team, consider a platform like Deel, which makes it easy to manage the regulatory and tax complexity that can come with having employees abroad.
As you plan for hiring, take a beat to think about your philosophy on hiring and compensation. Establishing an early set of guidelines about what you’re looking for in employees and how you think about compensation (both cash and equity) can save you a lot of pain that can emerge down the line from having been inconsistent in your practices.
As you scale, you’ll likely use an ATS (Applicant Tracking System) to manage your recruiting; however, if you’re just bringing on a couple of early hires, you can often get by using a tool like Notion to track your hiring pipeline and publish external-facing job posts.
Additional hiring and people management resources:
2. Legal
Legal is an area where it’s easy to think that you can put things off until later — you’re probably not going to be dealing with lawsuits or regulatory bodies right out of the gate. However, it’s well worth investing in legal advice early on. If you’ve incorporated, you’ve probably already worked with a lawyer to make sure your legal entity is set up correctly and all your paperwork is in order.
After that, it can be helpful to have general counsel with whom you can consult on an as-needed basis for questions, even if you’re not dealing with any specific legal issues. Look for someone who understands startups and can give you advice that’s tailored to your specific situation.
Here are a couple specific areas where it can be helpful to loop in a lawyer from day one:
- Intellectual property: If your company is built on a unique product or technology, you’ll want to make sure that you’re protecting your IP. Work with a lawyer to help you understand what kind of IP you have, what you need to do to protect it, and how to make sure you’re not infringing on someone else’s IP.
- Customer contracts: If you’re pursuing an enterprise sales motion, you may need to have contracts in place with your customers. Engage a lawyer to help you draft these contracts and make sure they’re legally sound — once they’re drafted the first time, you ideally shouldn’t need to edit your standard contract too much, but it’s always good to have lawyers review edits that your customer may propose. Even if you’re not selling to the enterprise, work with a lawyer to draft your terms & conditions that all of your users must agree to.
If you’re selling to other businesses, it’s also important to think about obtaining compliance certifications like SOC 2 or GDPR. While you may not be legally obligated to get certified, your customers will require it of you if you’re processing or storing any amount of their data, even if you’re only in the design partner phase. Services like Vanta, Drata, or Laika can help you get going on this critical step towards enterprise readiness.
Additional legal resources:
3. Finance
It may not be the most exciting part of the job, but it’s critical to establish basic financial operations early on to make sure you have a clear understanding of your company’s financial health. In your early days, you may be able to get by with a simple spreadsheet to track your income and expenses. As you grow, you’ll likely want to invest in accounting software or work with an accounting service (like Pilot or Bench) to manage your books.
In addition to keeping track of your basic financials, it’s important to plan for your future. Take time to develop a financial plan and track your progress against it (a practice commonly known as financial planning & analysis, or FP&A) — this can help you make informed decisions about when to fundraise, how much to raise, and what to prioritize as a business. Again, a simple spreadsheet often suffices here in your early days!
As you bring on employees and investors, make sure you’re keeping track of your cap table (the record of who owns what percentage of your company). Cap table management software like Carta can help manage this process and ensure you know and are accurately reporting on ownership percentages.
With the recent collapse of SVB, cash management is top of mind for founders. As your company grows, your needs will get more complex but here’s our recommendation for Seed-stage founders with less than $10M in the bank.
You are optimizing for two things: safety and convenience. For convenience of payment services and credit cards, you can use startup/neo-banks — in particular, banks with increased FDIC coverage like Mercury and Brex. However, it’s best to still limit your exposure to one bank for working capital and set up a treasury account directly with a top-tier bank that is less convenient to use but provides a safety net. We recommend keeping excess capital in major money market funds that have a publicly traded ticker symbol, are 100% backed by US T-bills, and are fully liquid for withdrawal without penalty. Startups with venture debt agreements should negotiate this with their primary banking partner; make sure all your capital is either FDIC-backed (working) or T-bill-backed (treasury).
Additional financial resources:
- 4 tips to demystify financial models for early-stage startups
- Making a financial model for your early-stage startup
- 4 financial tech tools for startups
- Equity 101 courses on Carta
4. Customers
If you have a small volume of initial design partners or customers and you’re engaging in a high-touch way, you can use a simple spreadsheet or database to track relevant information on each, like contact details and notes on your conversations.
If you’re pursuing a product-led growth strategy (and therefore have relatively lightweight 1:1 engagement with your customers) or your user base has grown significantly, you’ll likely want to invest early in a CRM (customer relationship management) system, which is purpose-built for tracking this kind of information and will often have helpful integrations with the other systems you’re using. A CRM like Hubspot or Pipedrive can handle this tracking and also manage your customer communications across multiple channels like email newsletters, support conversations, and sales emails.
Additional customer management resources:
- GTM funnel stages, metrics, goals for B2B startups
- Everything you need to know about CRM software for managing customers and sales
5. Data
There’s no one-size-fits-all answer for what product and business data you’ll need to track, but this is another area that’s important to consider early on, for a few reasons. Knowing how users are using your product will help you build better, and investors will appreciate insight into your core business metrics. There’s also an opportunity cost to not prioritizing data early on in your product development process. It can be really painful to implement product tracking retroactively once you’ve already built a product and you’ll never be able to run historical analysis on the time before you implemented that tracking.
Tools like Amplitude or Mixpanel can help you understand product usage and provide actionable insight to the whole team. If you want to take a more do-it-yourself approach, you can use a CDP (Customer Data Platform) like Segment or Rudderstack to track product events and export the data to a warehouse or other analysis tools. Reverse ETL tools like Census or Hightouch can help you tie everything together across your product data and business tools.
Additional data resources:
- The startup founder’s guide to the modern data stack
- The analytics stack every startup should implement on day one
When should startups hire an operations person?
Even though we’re just scratching the surface of operations here, there’s a lot to handle, in addition to all of your other responsibilities as a founder. As ops start taking up more and more of your time, you may want to consider bringing on a full-time hire to help you manage your day-to-day business operations. As a founder, your primary focus should be on getting to product-market fit — if you find that ops are pulling you away from that focus, it’s time to hire an ops person if you can afford one.
As you’re evaluating who to bring on board, take some time to reflect on your own strengths and weaknesses as a founder. Think about what specific pillars are taking a lot of your time and which ones you have the least expertise in — look to bring on someone whose experience and interests complements your own skill set and needs. The right fit here can come in a broad range of levels and experiences: from a seasoned executive-level COO, to a specialized finance or HR person, to a scrappy generalist who’s interested in taking on projects across the business.
Ultimately, making the choice about when to hire and who to hire here will come down to knowing your own strengths and finding the right fit for your team and business.
Conclusion
There’s a lot of nuance and potential complexity in each of these operational pillars, but you can start with the basics here and scale them up over time based on the specific needs of your company. And while there’s no exact formula to setting up your operations, there’s a lot you can learn from those who’ve done it before.
At Unusual, we’ve worked with hundreds of founders over the years and have been early startup operators ourselves. We’re passionate about helping our portfolio companies with practical and operational support. If you’re an early-stage founder interested in partnering with an expert team of operators, please reach out to alisa@unusual.vc!
Note: This post is not meant to be taken as legal, HR, or financial advice. Consult the appropriate professional for more specific guidance for your company.
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