Tech Startups are not Just About Tech: Relationships Matter too

Introduction

People often think that a technology company consists of…technology. Every day, subject-matter experts work together to build cutting-edge tech that will change lives and put their businesses ahead of the competition. Build great tech, and you will build a great tech company - easy and simple. 

This is, however, only a small part of the story. What often gets lost is that a technology company (or any company for that matter) consists of a set of relationships. Maintaining and servicing these relationships on a regular basis is just as (or even more) important as maintaining and servicing the technology you build. The relationships between the people who build the technology, the people who build the business, and the people who invest in the company are critical to whether the company succeeds or fails. 

During Y Combinator, I spent a lot of time “doing things that don’t scale.” As a founder, you’re hands-on in everything, including daily problem solving for continuously evolving problems. After YC, however, when we began scaling Encord, I learned (partly because a mentor explained it to me) that as a founder, I needed to focus mostly on just two things. One, ensuring that the business has enough runway – whether from fundraising or revenue or both – to keep going, and two, finding and retaining great people.

Ensuring a continuous inflow of funds and great people are two tasks that actually have a lot in common. Specifically, they both depend on building and maintaining relationships.

So the question then becomes, ‘how do you build relationships?’ 

Remember you are in for the long haul

A lot of founders think that when an investor sends over a funding check, that’s the end of the relationship. In reality, that check marked the start of the relationship, and now it’s time to maintain and further cultivate it. Investors want to help. They want your company to be successful. Don’t take them for granted. 

Instead, make sure you keep them in the loop and hold yourself accountable to them by doing your best work and remaining open to feedback. If you maintain and nurture your investor relationships, those firms are likely to help you in future funding rounds.

While investor relationships are important, ultimately, a company should gain its funds from customers and not VCs. Buyers are the key to success, so you need to make sure your business solves a real problem, makes people happy, and creates a product or service that people want.

A philosophy we learned to follow during YC and continue to follow now is to “bear-hug” your customers. If you have a product or service that people want, and you bear hug your customers, your business will grow and generate revenue. 

The parable of the elephant applies to your business

When building the strategy for a business, you need to stay close to the end users. To understand what your customers need and where your business fits within the larger ecosystem, you need to develop relationships with a variety of stakeholders. Hypotheses for solving customer problems don’t come from reading academic papers or journals but from talking to people.

We talked to more than a thousand stakeholders, and we built our business thesis from what we learned in those conversations. Predicting the distant future is difficult, so we think about how to combine more immediate customer needs with the next logical technological steps forward. Our data quality assessment tool is a great example of this synthesis, because we heard the same problem from many stakeholders, and we realised that we could build on our existing technology to solve that problem.   

We always continue to talk to customers, prospective customers, AI practitioners, academics, big tech companies, corporates, researchers, clinicians, and other medical professionals. We talk to a diverse array of people because each type of person has a different view of Encord and the types of problems our technology can solve. Much like the parable of the blind men and the elephant, different stakeholders focus on different parts of our product. One touches the tusk, while another touches the trunk. These groups might only know their part of the structure, and it's our job to combine their varying perspectives and subjective experiences to create a coherent structure and vision for the technology that drives the business forward. We always have to keep our eyes on the whole elephant.

Relationships are critical to finding and retaining talent

Without a doubt, having great people on your team is the most important factor in making the company successful. Unfortunately, there’s no shortcut or industry secret for hiring great people. It’s a grind. As an early-stage startup, don’t expect good people to just come to you. You’ve got to invest the time and resources into finding great people from the start.  Search for people, and refine your judgment and intuition about the type of people who will thrive in your company. Learn from the mistakes you make. 

Remember that the hiring process is not a one-way street. Yes, you interview people, but they also interview you. You need to sell the company and its vision. Generating excitement about the work your company is doing is important to attract people who believe in its mission. You can’t sit on your laurels and think that the most talented people will choose your company over another offer. 

Once you’ve hired people, share the context with new employees so they can solve problems on their own, but don’t micromanage them. Our philosophy is if you’ve hired people you have to micromanage, then you’ve hired the wrong people. You should be happy to let new employees solve problems autonomously. 

Take steps to build relationships with each employee and ensure that they understand their importance within an early stage company. The odds are always against you as a startup, so just having talented people is often not enough. You also need them to be bought in. These earliest hires need to know and understand that they have a great impact on the trajectory of the company. That’s the best way to get the best from your employees.  

Your problems are not unique. Leverage the experience of your network.

Remember, your company is not a unique snowflake within the larger business world. Many founders, including myself, we begin to think that we’re on our own, struggling through a sea of never-before-encountered problems. In reality, company leaders out there have already encountered and endured every issue you are facing. In fact, some leaders have encountered and endured them several times.

In all likelihood, 80 percent of the issues you’re facing are well-trodden, while only 20 percent are company-specific.

If you keep up the connections that you have, you’ll be able to lean upon a vast amount of industry expertise and business knowledge to tackle that 80 percent. Stay in contact with your mentors and your friends. At Encord, we still talk to our YC group partners. They're extremely busy, but they are an incredibly useful resource. 

Having friends and mentors who have experienced the things that you're experiencing and have already solved the problems that you’re trying to solve is immensely valuable, so embrace your network. When you encounter a problem, ask if anyone else has run into the same one. You’ll find that your network is a hive for answers that can save you time and money.

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