Founder Fridays No. 89
Why You Hate Chatbots -- Endurance Trumps Intelligence -- Building Culture
Happy Friday.
Why You Hate Chatbots
Chatbots can increase efficiency for businesses but often frustrate consumers due to uncertainty and lack of clarity in the interaction. Users may be unsure if they are speaking with a human or bot, navigating decision trees, or waiting for an unknown resolution. Providing clear expectations and information about wait times and outcomes is crucial to mitigate user frustration. The emergence of artificial intelligence (AI)-powered chatbots like those using ChatGPT has introduced new usability challenges, such as overly lengthy responses ill-suited for narrow user interface (UI) elements and the AI's inability to recognize when it is providing incorrect information. Offering obvious "escape routes" to human assistance, akin to Amazon's "chat to agent" button, can reassure users and improve the perceived value of the conversation. The effectiveness of chatbots in customer service ultimately hinges on their capacity to accurately determine when to provide an answer versus escalating to a human agent. Built For Mars (7 minutes)
Endurance Trumps Intelligence
Entrepreneurship is a test of endurance, not intelligence. Starting and running a business is hard — like, really soul-crushingly hard. It feels like the universe is constantly testing your limits. It's rejection, disappointment and late nights fueled by cheap coffee and sheer stubbornness. It's wanting to throw in the towel more times than you can count. But something magical happens if you hang in there long enough. You survive those seemingly impossible moments. You develop this mental toughness that can't be taught in a classroom. And that, my friends, is where intellect finally gets to shine. When you've faced the fire, all those smarts become truly dangerous. So, what does this mean? A few things: 1) You don't have to have the perfect plan. No business model survives first contact with reality anyways. 2) Action trumps ideas. Start moving, start messing up, start learning. You can refine your intellect as you go along. 3) You're probably tougher than you think. It's shocking what you can put up with when you decide not to quit. Maybe a better perspective is: "Entrepreneurship is a test of endurance that unlocks the power of your intellect." Scott’s Newsletter (8 minutes)
Building Culture
Anna Binder, Asana's Head of People and the company's first Human Resources hire, shares her step-by-step approach to intentionally building the company culture. 1) Talk to loads of people: Binder conducted interviews with employees at all levels to identify pain points and priorities, focusing on personal development and org-wide challenges. 2) Use an engagement survey: She used engagement surveys to gather quantitative data, but she emphasized the importance of applying judgment when interpreting the results. 3) Create a road map: Based on the insights gathered, Binder created an 18-month road map with clear priorities, securing buy-in from the founders and leadership team. 4) Over-communicate: She then over-communicated the plan to ensure everyone understood the methodology and their place within it. 5) Invest in onboarding: Binder stressed the importance of investing in thorough onboarding for new hires, even if it meant temporarily slowing down output, to ensure long-term success and alignment with the company's vision. First Round Review (18 minutes)
Founder FAQ: What Is My Startup Stock Worth?
If you're a founder or startup employee, you've likely sacrificed a comfortable position and high salary for long hours and low pay to build a company you believe in. Your financial bet is that selling your company stake will ultimately yield life-changing money, compensating for the wages you could have earned elsewhere. So, it’s natural to be curious about the value of your stock. The truth is that there’s two different valuations: Fair Market Value (FMV) and Secondary Market Value (SMV). FMV, set through a 409A valuation for tax purposes, is the accounting value of the shares at the time of issuance. SMV, on the other hand, is the negotiated price you could theoretically sell your shares for on the open market. FMV and SMV often differ due to their distinct purposes and methodologies, with SMV frequently exceeding FMV. Investors determine SMV by considering factors such as the team, market potential, technology, competition and their own investment criteria, which may not align with the IRS guidelines used in 409A valuations. Westaway (7 minutes)
Startup Funding Guides
I’ve put together a series of guides to equip founders to excel at fundraising. These guides break down the deal term by term and give you negotiation tips so that you can speak to investors with confidence.
Convertible Note: Guide / Video
Saving Time and Money on Legal
When we met this Series B startup, the team was frustrated with their law firm's slow turnaround and high fees. Contract reviews took four to six weeks, and the law firm charged $250,000 annually for basic work. The startup wanted to reduce sales cycle times and legal spend. They switched to General Counsel at Westaway. In year one,
We saved them about $200,000 in legal fees.
We shortened their sales cycle by about four weeks.
Our streamlined processes saved their ops team eight to 10 hours per month previously spent managing legal.
By switching to Westaway, they expedited deal closures, saved hundreds of thousands in legal bills and regained one day per month in productivity. If you’re curious if we could save you time and money, let’s talk.
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