This year my company, made it on the Inc. 5000 list for the first time. Cue the champagne. Here's the thing, though, we have no business being on this list. We followed none of the traditional startup rules.CoSchedule,
So what happened? Did we get lucky? I don't think so. I think we turned our small-town community into our biggest advantage.
Avoiding the VC Shake Out
We've never taken any VC funding at CoSchedule. Being a North Dakota based startup, we don't have a lot of VC's in our neighborhood. But, that doesn't mean we haven't raised any money. We've actually raised more than $2.5 million dollars since launching in 2013.
The difference is that our funding has come through a creative use of debt financing and local angel investors rather than "institutional VC capital." As it turns out, this actually put us ahead of the curve as VC investments have come under additional scrutiny by startups.
You've recently heard about Buffer buying out its VC investors. Wistia did the same thing.
The reality is that venture capital is about leveraging a company as a financial instrument, and that can bring a lot of negative consequences. As a company that skipped this step altogether, we've been able to avoid much of that frustration.
Be the Best Gig in Town
There are endless articles about how to do hiring at startups. And for good reason, building the right team is just plain hard. To make matters worse, once you finally find someone, you have the added challenge of keeping them. But, we've learned that there are actually advantages to hiring in a smaller market.
The truth is that great talent is hard to find anywhere, but big cities make it more difficult for startups to stand out. As a little fish in a pond full of established -- and eagerly anticipated -- competitors, you might not be many prospective employees' first choice of work.
At CoSchedule, we have embraced the things people love about the Valley.
We have a cool open office, an obsession with adopting the latest technology, a flexible paid-time-off program, lean marketing strategy, and, of course, every team uses agile project management techniques.
In a small town, however, you are automatically a big fish in your small pond. If you offer a unique opportunity, talent in the greater region will flock to your business. Recruiting the best and brightest suddenly becomes much easier.
When we started, we were the only people in North Dakota making enterprise SaaS software. We became experts at pitching our unique situation to people around the area, landing top talent from multiple states, including Oregon, Washington, and Colorado.
Now, if you're in a similarly-sized pond and would like to do what we did, here are four places to start.
- Watch the talent war. Be mindful of the talent war within your area. Evaluate other companies, consider the types of work they offer, and give candidates something new.
- Focus on keeping super-happy customers. If you're not chasing institutional capital, use all of the time you save not talking to VCs to talk with your customers. Before we even built the first version of our product, I made a powerpoint deck of our first app concept and showed it to customers. Their feedback was pivotal in the development of our software because it allowed us to build a product people would actually pay for.
- Be a sales person. Highly related to number two, I took over 200 sales calls myself before hiring our first salesperson. This helped me stay connected to our customers' needs. Be slow to outsource substantive interaction with your customers in the early stages.
- Don't force growth with cash. In connection to doing some jobs yourself, don't force growth with cash and big hiring sprees. Because we were bootstrapped, we couldn't buy our way up and to the right. In turn, this made us focus more on customer happiness and success. We simply couldn't afford astronomical churn because we couldn't throw endless gobs of money at customer acquisition.
To date, we've found being in North Dakota a tremendous competitive advantage. And best, as our 2,877 percent growth-rate shows, a small place doesn't equate to small growth.
So, even if you're outside of startup hubs like Silicon Valley, you can still thrive as a startup in hyper-competitive markets -- even without VC money.