Founders and entrepreneurs often grapple with challenging questions as they navigate the intricate journey of building and scaling their organizations.
Questions like, "Should I go slow for some time in the short term to allow myself to go faster in the long term?" and "Why is my company slowing down even though I have more people?" can be perplexing.
To shed light on these issues, Manoj Agarwal, Co-founder of DevRev, recently shared his invaluable expertise with the founders of Blume's portfolio companies.
About DevRev — A Pioneering Tech Startup:
DevRev was founded in October 2020 and raised over $85 million in seed money from investors such as Khosla Ventures and Mayfield, making it the largest seed in the history of Silicon Valley. It is led by its co-founder and CEO, Dheeraj Pandey, who was previously the co-founder and CEO of Nutanix, and by Manoj Agarwal, DevRev's co-founder and former SVP of Engineering at Nutanix. DevRev is headquartered in Palo Alto, California, and has offices in seven global locations.
DevRev’s AgentOS, purpose-built for SaaS companies, comprises three modern CRM apps for support, product, and growth teams. It connects end users, sellers, support, product people, and developers, reducing 9 business apps and converging 6 teams onto a common platform.
Unlike horizontal CRMs, DevRev takes a blank canvas approach to collaboration, AI, and analytics, enabling SaaS companies to increase product velocity and reduce customer churn. DevRev is used by thousands of companies in search of low latency analytics and customizable LLMs to thrive in this era of GenAI.
In this blog, we will delve into the valuable insights and knowledge generously shared by Manoj during this enlightening session. The content for this blog has been derived from the original transcript available on blume.vc.
Question: Why do companies lose efficiency as they scale?
Manoj
"When establishing a company, it all starts with a nucleus."
In a dynamic tech company like ours, our journey began with a humble set of tools – GitHub and G-Suite. Back then, we were a small, tight-knit team, each wearing multiple hats responsible for our products and customers. It was a stage characterized by shared responsibilities and a common language that bridged the gap between product development and customer satisfaction.
A shift began to occur as we secured seed funding and started to grow. New team members came on board, and we realized the need for additional tools and systems to support our expanding operations. The engineering team adopted Jira to streamline their processes, while our inter-team communication found a home in Slack.
This phase underscored a unique aspect of our company's DNA: the fusion of product and customer focus. Despite our growth, the small size of our team meant that each member remained deeply involved in both aspects of our business. They shared a common language focused on the product and the customer.
However, as time passed and our company continued to gain traction and expand its customer base, we found ourselves at a crossroads. The increasing complexity of our operations prompted a natural division between the back office, where product innovation thrived, and the front office, dedicated to delivering exceptional customer experiences.
With growth came specialization, and the once-unified team evolved into distinct departments. We witnessed the emergence of cloud ops, customer success, and customer support as separate entities within our broader structure. New departments like sales and marketing were also introduced to help us reach new heights.
Yet, here's where the journey took an unexpected turn. Despite growing to a team of 50, our productivity had yet to scale proportionally. It was as if we were achieving less with 50 people than when we were a lean team of five"
Question: What could be the root cause of this inefficiency?
Manoj:
"It's worthwhile to understand if all the employees are still actively involved in managing the product and serving the customers at this stage.
Do they have access to the necessary data to understand what's happening on both the product and customer sides?
One glaring reason for this productivity gap was the proliferation of department-specific tools and systems. While these tools served their purposes within their respective domains, they needed more effective integration with one another, hindering seamless data sharing between functions. As a result, numerous meetings became necessary to transfer information between departments, sometimes even requiring hiring liaisons to bridge the communication gaps.
But there were other challenges we faced. Another significant source of inefficiency was the need for documented information. In the early days, face-to-face discussions made decisions, and everyone was on the same page. However, as our team grew, this valuable knowledge was often stored in individual team members' heads or the depths of messaging platforms like WhatsApp and Slack.
When a new team member joined, they encountered an information gap, and this asymmetry in information only compounded as we continued to expand. As the team grows, the absence of documented information becomes a bottleneck, hindering our ability to make informed decisions."
In the ever-evolving landscape of a scaling tech company, these challenges are not unique to us. They are the hurdles that many organizations face as they navigate the intricate growth journey. However, by acknowledging these challenges and actively seeking solutions, we pave the way for sustainable growth and continued success."
Question: What are your thoughts on hiring, titles, promotions, and meritocracy?
Manoj:
"Typically, organizational structures resemble a pyramid shape. Senior management makes up about 10% of the employees, with mid- and junior-level managers accounting for the rest. The junior management forms the bulk of the weight of this pyramid.
However, when it comes to making the initial hires, this structure is flipped. Hiring senior individuals first, followed by mid-level managers and junior team members, is standard practice. This happens because the early stages of a company are often characterized by ambiguity, and having experienced members on board helps navigate through uncertainties.
Nevertheless, it is essential to maintain a balanced pyramid and avoid a top-heavy organization where recent graduates or interns report directly to Vice Presidents. A healthy company maintains a well-proportioned pyramid structure.
To promote transparency and meritocracy within the company, Nutanix implemented a unique tactic. New hires joined the company without a specific job title. Each candidate's experience and contributions were compensated fairly, but formal titles were not initially awarded. After 6 to 9 months, the technical committee reviewed the candidates' performances, assigning appropriate tags based on merit.
What is particularly noteworthy is that the employees' direct managers did not conduct these performance reviews. Instead, the technical committee evaluated the performance while the managers gathered the necessary performance data.
When it came to promotions, candidates were expected to request a promotion, and the technical committee would vote based on the data provided by the managers. This process resembled an awards-based system, where a triumphant rise signified the candidate's recognition within the company, as the decision was made through a meritocratic process involving peer voting."
As a leader, Manoj encountered situations where he identified talent and wished to bring them into his company. However, if the individuals demanded a title upon joining, Manoj prioritized the company culture he aimed to foster above all else and chose not to hire such individuals.
Adhering to principles can sometimes be challenging in the face of temptation, but these choices distinguish great founders from the rest.
Question: How does "culture eats everything for breakfast" relate to the unteachability of culture?
Manoj:
“Every founder must walk the talk on culture; one cannot just say it and not walk it.
DevRev has devised the 4 H's value system while hiring for its team. These 4 H's are: Hungry, Humble, Honest with Heart.
Evaluating candidates based on their alignment with our company's values is crucial. I firmly believe that values are something that can't be taught. Take honesty, for example; it's a trait an individual has or doesn't have. That's why I strongly advise that if a candidate doesn't align with our company's values, it's best not to move forward with their hiring, even if they excel in other areas.
Furthermore, I recommend establishing distinct values employees can acquire and develop here. At DevRev, we've embodied these values in the four A's: Authenticity, Antifragility, Ambition, and Attention to detail. These values are integral to our work environment, and we encourage all our employees to embrace and practice them.”
Question: How do we embrace authenticity beyond honesty, vulnerability, and open-mindedness?
Manoj:
For example, while working with your juniors or peers or seniors or customers, if you feel you made an error or something didn't go well, do you have the ability to take the onus for the situation?
Sometimes, one might think they didn't do anything wrong, but another person might feel otherwise. In such a situation, does one still have the ability to take a step back and own the situation?
Another vital aspect of authenticity is the ability to remove self-righteousness. During meetings, valuable insights and innovative ideas can come from individuals at all levels, whether interns, new team members, or experienced professionals. Considering and giving weight to all ideas without dismissing them based on personal biases or preconceived notions is essential. A truly authentic approach involves an open mind and willingness to embrace diverse perspectives and contributions."
Question: Why is resilience not enough in today's business climate?
Manoj:
“As a founder, resilience is non-negotiable in today's unpredictable business landscape. It's expected that we not only weather storms but also construct companies that thrive amidst adversity. However, I advocate for a shift towards building what I call 'antifragile' businesses – enterprises that not only withstand crises but emerge from them significantly more robust.
By cultivating anti-fragility, we gain a distinct competitive advantage. While our competitors may merely survive through tough times, we view these challenges as opportunities to transform our companies into vastly improved versions, positioning us for success in the market.
Now, the next question arises: How does one adopt an anti-fragile mindset?
It's all about perspective. Rather than fearing failure, we should celebrate it. Failure becomes a valuable resource for driving significant enhancements across our company – from our people to our business model and products. This demands the conviction to rally our team to tackle these failures head-on and evolve.
We must also be willing to endure short-term setbacks. For instance, when faced with rapidly depleting cash reserves, we typically have two options: shut down the company (a resilient choice) or relentlessly seek funding with the hope that the problem will eventually be resolved (also resilient). However, there's a third path: we mobilize our entire company and pivot toward a new business model. This path may involve short-term pain and revenue loss but positions the company for enduring success."
Question: What role does purpose play in connecting all these aspects?
Manoj:
"I firmly believe in aligning every action with a clear purpose. When that purpose is centered around aiding others, it not only enhances execution but also leads to superior outcomes.
To illustrate this principle, during my time at Nutanix, we encountered a situation where a team responsible for data center operations couldn't enjoy their Christmas break due to maintenance schedules overlapping with the holiday season.
Instead of accepting this as the status quo, our leadership team approached the issue with a humane purpose in mind: ensuring that this team could have the well-deserved Christmas break they needed. We undertook a substantial overhaul of our IT infrastructure, enabling all maintenance tasks to be carried out during regular business hours, thus preserving the holiday season for our team members.
Similarly, at DevRev, our overarching purpose is to grant our employees the gift of time to focus on meaningful work. When entrusting a project to someone, we ensure they have the tools and information to handle it optimally. We share data transparently, empowering them to make swift decisions and prioritize work contributing to our company's growth."
Throughout our exploration of the wisdom imparted by Manoj Agarwal, co-founder and President of DevRev, it becomes clear that the journey toward building and expanding a prosperous organization is intricate. From navigating the intricacies of organizational efficiency and effective communication to the significance of upholding a well-balanced hierarchy, nurturing transparency, and embracing a robust corporate culture – each facet plays an integral role in shaping a company's triumph.
To grow and innovate your business, see how DevRev can help.
