Fractional CTOs, Startup Growth, and Resilience

Welcome to Building Better Developers, the Developer podcast, where we work on getting better step by step professionally and personally. Let's get started. Well, hello and welcome back. We're continuing our season of interviews. We have a new interview this time. We're going to be speaking with Benjamin Friedman. We're going to talk about fractions, but not fractions per se. We're going to talk about fractionals, fractional CTOs, CIOs, things of that nature. We have spoken a little bit, particularly from the finance point of view before, but we're going to swing back around a little bit and talk about how you properly place your finances, your business, your side hustle financially. And when do you bring in an expert on that? Because if you're like me, you're not an expert on it. If you happen to be, you don't have to bring somebody in, but you will have to bring an expert in in another area. And that's a lot of where our conversation goes. But I don't want to steal the thunder. So let's get right into our conversation with Benjamin Friedman. OK, today we're starting a different discussion where we're talking with Benjamin Friedman and he has done a lot of work in startups and especially helping tech founders build and particularly scale and grow startups because everybody. OK, maybe not everybody. A lot of people can jump into a startup. It's getting beyond that. It's getting past that first step. And this is somebody that's done that has helped others do it. And I think that's where we're going to see a lot of a lot of opportunities to take some notes and maybe sort of use this as maybe a mirror or to gauge where you're at, where you want to be. And we'll talk later. We'll have links in that case. You want to reach out to him and see if he can help you out. But as always, it is easiest for me to just sort of pass an introduction on to you because that way I don't have to worry about flubbing it or missing anything. And sometimes there's some really great little tidbits get thrown in when you introduce yourself. So I want to welcome you to the show. And if you can give us a little bit of your background. Thanks so much, Rob. So glad to be here. First, let me talk about some of my experience that could relate to your audience. And then I'll go further back in history. So I have worked with several technical co-founders, as you mentioned. Most recently, I was CFO at a SAS Data Analytics company that was acquired by automatic VIP WordPress. I'd like to think that was a successful exit for everyone. I've worked with clients who have themselves customers, which are technical companies. So I've worked on it from that perspective. And also, I brought in fractional CTOs to help out some of my clients. So I understand the needs from a business perspective and when to hand off to technical experts. All this stems from a two decade career working to help build, scale and grow startups and small businesses. I got into my first one. It was an e-commerce company over 20 years ago, and it was just magical slash addicting. The company doubled every year for three years, both in number of employees and in revenues was eventually acquired by First Data Corporation. And I just love the opportunity to both be thoughtful about how you plan for the future, but also you have to start experimenting and trying things right away to see what works. And I've taken that in a number of different environments. And the last few years, I've been doing it for myself where I work with different companies that have hit an inflection point. Either they found product market fit and they're ready to go to the next level or they've gotten a fundraise and they're ready to take off. And I really helped them figure out, OK, what are your priorities and how do we organize behind that so that we grow as efficiently and quickly as possible? That is quite the introduction. It's a good start. I guess to start with, you've worked with, although technical, you've worked with several different companies now and several different startups. Are there some things that regardless of where your industry is or maybe what you're whether your products or services or there may be a couple of things there that somebody looking at that this should should be considering about or maybe even some, for lack of a better term, like best practices or things like that that you see are what the successful do and maybe in particularly starting from, we'll call it the prep work, the groundwork, maybe they do even before they get into it. So somebody sitting there going, I'm not so sure what are some things they can do before they even step into this or as they're stepping into it to help for if nothing else, improve their chances of success. Sure. That's a great question. Some of the hallmarks of a successful founder include really identifying and grasping with the what I'll call the founder problem fit. So there is something that's keeping them up at night. They're thinking about constantly. They never put work aside because they want to solve this problem. And the reason I say that is founders and the rest of us will face a range of uncertainty. The markets change, the economy changes, the team changes, the customers change. If you have investors or other stakeholders, those will change. The one thing that will be constant throughout the founder journey is that problem and trying to solve for it. So if you meet somebody who is just constantly trying to find a way to make the world better and solving this problem. And if there is a strong case for there being a business model behind trying to solve that problem, then I'd say gravitate to that person, do your best to work with them because that's going to be amazing. Some of the other aspects are founders who've done a good job of balancing planning and action. So the planning is what is your vision? What are your values? What are going to be your cornerstones throughout the journey? Those things are never going to change. And then also at the same time, being biased towards action, figuring out where are you going to run experiments? What are you going to try to see if it works? How long are you going to run those experiments? It shouldn't be forever. You should think, you know, in terms of weeks, maybe months where you're going to try something out, maybe it's a prototype, a mock up, an MVP that you start to show potential customers. Hey, am I onto something here? What are your thoughts? Is this something that you would use? And if so, what would you use it to solve? What problems are you trying to solve with this MVP? Asking those questions, a bias towards action, but always coming back to what's the strategy behind what you're doing. Those are some of the things that I've seen, Rob. Well, that leads to another is, as you mentioned, MVPs and. Basically the marketing side, I guess, is that really it's more the test marketing side of things like, is this going to work? Is it not going to work? Let's let's figure this out. Is there are there constraints that you see that are pretty common or that would really would be your things that are like a flag or a leading indicator that either says early on that you're going to look at either says this is going to work or this is something we need to bail out on and move into pivot or whatever and try a different approach. Sure. So I'll take that from two different perspectives and I will step aside from the technical, is this actually going to work in a real technical environment? And I'll stick to a business perspective. One thing to keep in mind is can the founder describe the problem and solution in about 30 seconds? Now that might seem oversimplified, but I find that when founders go on and on about the problem they're trying to solve and the solution they're providing, if it goes too far, it typically means it is very complex and it's unlikely to realistically lead to a strong business model. Now, of course, there are exceptions. Rocket science is very much that, et cetera. But even with rocket science, you say, hey, I'm trying to be the first one to land a rocket on a pontoon, right? That's a very simple explanation of what your goal is. The second is working with founders who are really interested in solving problems. But that doesn't mean that they're not open to a discussion, to other solutions. Those founders who have strong beliefs loosely held, which is something I know VCs say a lot, it's one of the few things I agree with them on. That is you have the answer at hand, but you are open to other approaches. You are open to the data telling you different. You are open to customers using your MVP for a different reason than you originally intended. And for that, I turn to the example of Google. They didn't set out to be one of the leading companies of the world based on search engine marketing. It just happened to work out that way. But the founders were open to, hey, that's a solution that people really are gravitating towards and find purpose in. And so we're going to build upon that solution. And that's gotten to where they are today. Now, it could be argued they need to pivot at some point soon. And I think they're having their own internal argument there. But for many years, that was the direction they headed, but not their original intent. That's interesting, because there's almost with every as I think particularly maybe it's because it's technology and because technology does tend to move faster. If you're building automobiles, that technology is not going to you're not as likely to have a change six months or a year from now. Although these days, you never know, there may be some new fuel or something like that that would change that industry. But in technology, particularly, there is it seems like almost a regular almost watershed moments even where there's some very big changes and things move. Tech changes enough that it's that you go to like, you know, there's big things like you could go to iPhone or wireless or now some of the the touch sensitive screens and some of those things that that change the landscape. And if you look at tech companies, there's a lot of them that, especially the successful ones, that you can go back and see that they weren't that wasn't really their plan, where they ended up is not where they thought they were going to end up. I mean, look at like a Facebook is another one or even Amazon. If you look at where they've expanded to, if you go back to when Amazon first started, it was just books on the web. It was so simple. And now it's, you know, everything under the sun, it feels like. Do you see that? And particularly with the startups, or do you see that a lot of times where they're already changing? Or do you see is it more of a sort of like, you know, going 100 miles an hour, one direction, and then it is something where they they have to pivot and do a lot of change, or is it more of like at a, I guess, for like a venture, like evolving their their targets as they go, particularly for the successful ones or, I guess, on the flip side, since you said those for those that don't, do you see that that's very common, that they they had a way out and they they turned away from it? And I'm sorry, that's a two or three parter. But I think that's a couple of things that you can go with that. Right now, I appreciate the tea up. So I think of it as you can create two different lists. One is a list of what is constantly changing, and the other is a list of what is remaining. So going back to the founder problem fit, the vision, the values what is going to bring you meaning at the end of the day. And I know some founders are just scrambling to cover payroll and figure things out. But there is merit to be had to taking some time to step back and say, hey, why am I in this and what's going to give me purpose? Because that's going to come into play later, whether you have success or face hard challenges, how you find resilience is going to come back to why are you in this game? So that's all the category of constant. And in the category of change are some of the items I mentioned earlier. The economy, the market, the customers, your team, your stakeholders, your investors, there is constant change in startups as you're trying new features, new products, new MVPs, new service additions to what you're doing. So what's the bridge between those two categories? That's where I would say, hey, if you're a founder, you recognize the constants, but you also have to recognize the change. Really look to these areas to bridge the gap. One is experimentation. How do you take small steps towards trying new features, new products, really new branding, new opportunities, you know, start a flyer, talk to a few people, expose some of your existing customers to a new feature, really test it out and see what are the reactions. You want to compile a lot of data. Now, for some of our listeners, that's going to be second nature for others. They're going to think they're doing that or kind of that's in the back of their mind. But really bringing to the foreground, what data are you collecting? And think about that data before you start the experiment, not after. It's tempting to find data that confirms our assumptions. Once we've gotten started, that's kind of human nature. But instead, before you run any experiment, think, what does success look like and how do I measure it? And then finally, I really encourage founders to be open to a range of advice. So a lot of us to be successful will have friends and family and people who support us no matter what. And that's fantastic. But you also need to find people in your life as a founder who will push back on you, who will tell you what you need to hear, not necessarily what you want to hear. And when you come to different inflection points in your life as a founder, you want to reach out to those people and say, hey, this is the challenge I'm facing. This is the opportunity I'm thinking of pursuing. This is what I'm looking to try. What do you think of that? And you want to sit back and listen to their advice. Now, if you hear one or two detractors, but otherwise you're getting a green light, that's great. But if everyone is questioning where you're headed and what you're doing, then you really want to step back and think about it. That's going to separate out the prima donnas from the people who are quietly but completely successful in what they're doing in life. They could do what I do want to step back before we get too far from from where you mentioned it was the idea of having sort of that being able to state your problem and, you know, essentially 30 seconds or less or something like that. So for yourself, as you've got your as you've created this company, what is the particularly because it's part of why you're here is what is the problem that you're looking to solve? Sure. So as founders have identified their product, market fit or their service market fit, and now they're ready to grow exponentially, I want to partner with them to find the solutions either directly through handling some leadership or project responsibilities or indirectly by finding them other resources that will help them to scale quickly. So now taking that that idea, now, this are you talking to them after they've they've gone through a lot of this testing and MVP kind of work. And so they're they I guess this be where they have a product. They are they have customers they're selling. So this is not just, you know, out of the gates. This is you've gotten out of the gates. Now you've got your feet underneath you and you're really ready to really grow that that organization. So I recognize this is a continuum. So I talked to founders both at seed stage as they're in ideation, as they're coming across with some different ideas, thinking about how to move it forward. For example, should they fundraise now or should they wait? Spoiler alert, I typically tell them to wait as long as possible. And then I also work with founders who have gotten traction either in revenue growth and or in investing. And so they have a sizable war chest. They have some runway. But they're really thinking about the best way to prioritize and apply those funds. So were the ones that you're you talk to early on that you're getting them almost at the beginning of the process. Are there things that you work with them when they're going through some of this testing and some of the, you know, building out of VPs and really rounding out what their solution is? Are there things they can do there to prepare themselves so that they are going to be better able to build and scale quickly when they get to that point? Or is it more of a hey, let's let's get your problem solved first. And then it makes sense to step into, you know, worrying about growth, really. Sure. So in that category, I typically run in the two types of founders. One has a bunch of different ideas in mind. And they're thinking, oh, I could do this, I could do that. And I'm trying in that case to really help them focus in on one idea. And it's not that they have to commit to that idea for life. But I want them to commit to that idea for six to eight weeks. OK, really think through how do you plan that out? How do you get investment? What resources do you need? How do you move forward on that? And then how do you run an experiment or two in order to move that forward? You know, maybe it is some mockups. Maybe it is showing it to some people. But I help them to really focus their energy and go from wide to narrow. In the second circumstance, the founder has figured out what path they want to pursue, and they're really stuck on. What is the next step? They haven't fundraised. They don't have any revenues, but they have a pretty clear picture of their idea. They have an MVP out there. It's starting to get some traction. Maybe they've signed some deals or they've come pretty far along the way. And in those circumstances, I'm really helping them figure out what are the next one or two steps and how can I help them move forward? Are there resources they need? Conversations that will be helpful, strategic investors or, you know, potential clients that they can talk to and really at a loose stage. So they're not asking someone for a seven figure commitment. Instead, they're approaching these companies and saying, hey, if I provide this type of product, would it help you and your business to be more efficient, to grow revenues or to cut costs? And if the answer is one of those needs, then those companies are pretty likely to be supportive down the road. But it also tells the founder, hey, I'm really on to something. Let me, you know, develop this further and take the next step. I'm not I hadn't looked back as much. What's your experiences outside of Stardust? But is there are there things that are special attributes of a startup in wanting to do this building and scaling and growing the things that you're going to work with them that there would be different from somebody that's maybe not a start that's, you know, been established for a bit? Sure. So the startups that are moving forward nicely. And that's what I kind of implied, Rob, from your question. Those startups that are moving forward nicely, they're measuring their results. It might not be the most sophisticated, you know, power bi metrics to start, but they are looking at, OK, what's working well? What could be better? If something could be better, let's change it or fix it. If something's working well, how do we double down on it? The startups that are moving well have thought about their stakeholders from a range of key players. So they're thinking about their team, their customers, their potential or current investors, strategic investors, strategic acquirers. So they're not limited to one or two audiences, but they're thinking very widely. And then third of all, they're thinking holistically about their needs. So they're not caught up in only the product or and only the finance or and only the sales, but they're thinking across those areas. And in addition, they're thinking about marketing, people, ops, I.T., you know, public relations. They're really thinking very widely about their needs. And they might not be pouring resources into all those areas. To start. But they have a plan in mind for when they have the resources, when that's going to be triggered in those different areas I mentioned. OK, yeah, that makes sense is that it's, you know, fancy where you differentiate or sort of maybe even draw the line between what like a better term established versus, you know, startup or still working into those phases, because it does feel a lot of time that it's it's hard to draw a line. It's just sort of you're in it and then you're still in it. Then just someday you're like, oh, hey, we're not in startup mode anymore. Or, you know, I mean, sometimes there's big things like you, I don't know, go public or something like that. That's a huge moment for that. But a lot of times it's just you're you sort of maintain that mentality for quite a while. And there's some businesses that get very big still in that sort of, you know, really that startup mode that they're they're a little leaner, they're a little quicker to to move. They don't have as much organization or it's a very loose organization as it were. Now, you've talked a couple of times about the the founders and moving forward and some of the things that they're they're struggles. But one of them, particularly when you think about people that are thinking about a startup or they're, you know, they're in there and they're sort of in the trenches or maybe in a like a work hustle type mode or something where they're something's getting they're kicking something off, off, trying to get off the ground. What are maybe some regular risks or fears or concerns that you run into with founders or the things that you that are other than their problem, maybe they keep them up at night. Sure. So founders are taking on a nearly impossible task. If you look at it statistically, most startups fail to get initial funding from there. Most startups fail to get follow on funding from there. Most startups fail to be a sustainable business. This is a Herculean task. We're inundated with images and visuals of startups that have been successful, just like we see people who play in the NBA or people we hear about who won the lottery. Just because we hear about these amazing success cases doesn't mean that the preponderance of examples are not in the people who did not necessarily find success. So I tee all that up to say that founders are facing sometimes inordinate pressure on themselves and sometimes also from their friends, from investors, from the team to be successful. And I think it's really important as a founder to think from the outset, how am I going to be resilient through the ups and the downs? How am I going to find the drama mean to take this roller coaster ride and be able to hold my stomach down as I'm going in these incredible heights and these incredible drops? And with that, I like to talk to founders early on about how do you take care of yourself physically, mentally, productively? How do you find the people who are going to support you through this journey? Really think about those needs. There are going to be very specific business problems and technical problems and other issues to be resolved. Of course, that's going to happen. But going back to the idea of constants, you, the founder, are going to be constant throughout this journey, no matter what role you play and what responsibilities you have, you're going to be there from start to finish. So I really want to double down on how you plan to embark on this journey, what tools and skills you're going to take, what challenges you might have personally and how you're going to supplement that. And how are you going to get through this no matter what, in order to take care of yourself and feel really good about it at the end? The worst story is not the founder who doesn't make millions. The worst story in my mind is the founder who makes millions and is miserable, depressed, detached, and really just needs years to recover if they ever do it all. And so I want to avoid that scenario because I think no matter what your ups and downs are, there's a ton to learn from here. There's a ton to benefit. And you just have to come in with the perspective of I'm going to be so much better for this journey no matter where we end up. And I encourage founders to embrace that scenario. Well, that's good. And yeah, that's I agree that it's the people that are successful in or outwardly are very successful, but then inwardly are just a wreck that you feel the heart. You know, your heart goes out to them the most because they put all that work in. Everything should have fallen into place, but somewhere along the way they got they got off the off the rails a bit. And that seems as good a place as any to pause and take a little bit of a breath here before we jump into part two in the next episode. This is definitely one of those that there was just a flow. Speaking with Benjamin, going through the diverse topics that we covered, that it felt almost like we should just make it one nice, big, continuous episode. But I want to be respectful of your time and make sure that we don't suddenly just throw out a twice as long as normal kind of episode. That being said, you don't have to wait too long before you come back for part two. Gives you a little bit of time to digest what he's covered so far. And then we'll come back and pick it up next time right where we left off. But until then, go out there and have yourself a great day, a great week. And we will talk to you next time. Thank you for listening to Building Better Developers, the Develop-a-Noor podcast. You can subscribe on Apple Podcasts, Stitcher, Amazon, anywhere that you can find podcasts. 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