F*ck being conventional

There’s nothing conventional about building a startup.

In the beginning, you’re usually a few people dumb enough to think you can just will something into existence… and compete with companies who have considerably more money, employees, resources, awareness, experience, etc.

Translation: it’s hard as shit.

But that’s also why I absolutely love startups — it forces you to think and approach things differently in order to compete.

There are so many things we do at beehiiv that others may consider unconventional:

Entirely remote workforce (and ~30% international)
Barely any meetings
Full transparency into financials and company data
Every employee has shares in the business

…and so many more. But today I wanted to share an unconventional solution we came up with in the early days to help us scale quicker and never compromise on talent density.

Nearly nine months after we launched, in August 2022, we were a small team of about eight.

A few months earlier we tragically lost our friend and CTO, Andrew Platkin, and despite all of the turmoil, we were beginning to come out on the other side of that (a story for a different time).

We were looking to bring on a new CTO and were in late stage conversations with Noah Pryor. He was previously the first hire at Teachable and scaled the engineering team to over 85 people as their CTO.

I was also in desperate need of a Chief of Staff to help operationalize the business alongside me.

I had been speaking with Preeya Goenka, who was our former CSM at Sailthru back when I was working at Morning Brew, and knew that she’d be a perfect fit for the role.

But at the time (in August 2022), she had just recently left Sailthru and was now a VP at a no-code AI startup that had raised over $28M.

Good news: we were talking to two incredibly talented candidates we liked a lot.

Bad news: we were a tiny eight person company that raised a modest seed round, and couldn’t possibly afford these hires.

We probably had $1.75M in our bank account and were earning about $25,000 in revenue per month.

If we had simply matched both of their previous salaries (let alone give them a better offer) their salaries combined would have been ~40% of our bank account.

So conventional thinking would leave you with two options:

Refine our search for candidates more in line with our “budget”
Match their preferred offer and put the company’s financials at risk

Both options kind of blow to be honest. You don’t build an A+ company by hiring B+ talent. But you also can’t put the company at financial risk (nor did I want to exacerbate my already sky-high stress levels).

Despite being early, we had clearly found some level of product-market fit and revenues were predictably scaling ~25% MoM. Here’s a screenshot of our revenues from Stripe dating May 2022 to December 2022.

Revenue data from Stripe

August is the fourth one over from the left at a modest $24,634.

So I went back to both Noah and Preeya with a proposal:

❝

I want to pay you exactly what you want, you deserve it. But it would bankrupt the company which isn’t good for you or us. So what if we started you off at half of that? When the company hits $100,000 in monthly revenue we’ll be in a better position financially and bump your pay. When the company hits $150,000 in monthly revenue we’ll do it again. And finally once again at $200,000 to get you all the way to your preferred compensation. I think based on our growth rate we should get there in 10-14 months, and of course you’ll have shares in the company as well (and a bit more at that, given the risk you’re taking).

This proposal perfectly aligned incentives for everyone. We all wanted to execute and grow the business, resulting in more revenue. When we hit those revenue milestones, we’d have more available capital to more comfortably compensate them.

It was also a really incredible stress test to vet their belief in the team and our vision. Accepting this proposal meant they truly believed in me and what we were building, and were confident we would in fact hit those milestones… even if it cost them a bit of cash up front.

Fast forward to today and not only did we absolutely crush those milestones…

Noah has been a tremendous CTO and is currently leading a team of 12 engineers
Preeya was promoted to COO late last year and is my right-hand person for literally everything
The business is doing roughly $1M /mo in revenue and still scaling aggressively

Business school and conventional thinking doesn’t tell you to do this. It takes a little creativity, some gut instincts, mixed with some storytelling and persuasion.

But we got our people without putting the company at risk.

I’m grateful for a whole lot of things so far on this journey — them trusting me last summer is certainly one of them.

Credit: Kevin Shim

The number of plants to take care of on that desk is a bit too much responsibility for me personally… but I don’t hate the view. Thanks to Kevin for our first reader submission 🙏.

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Some of my favorite content I found on the internet this week…

Promoting myself a little here, but I was on a podcast with Scott Galloway & Ed Elson that dropped over the weekend (Spotify / Apple / YouTube)
How Google Search and ranking works according to Google’s Pandu Nayak (Search Engine Land)
I always thought the Stanley Cup had to do with hockey but apparently there’s a real cup causing some real issues (Time)
I loooooove some startup drama, like this Carta ordeal (Twitter)
- As a Carta user myself, I wasn’t concerned until I saw James’ tweet…