It's been quite the year for us at Thoughtful, as we made our first hire in February and have had the opportunity of working with and incubating six startups in the past 9 months. From day one, we've seen this year as an experiment - a chance to try different models of consulting, incubation, and management - and we've finally had a chance to step back and reflect on an entire year of data and experiences. Here are a few lesson's we've learned and the changes that we're implementing as a result.
Early-stage founders generally don't have a lot of cash sitting around. Yet we know our value is enormous and the work that we do will significantly change the trajectory of a company. This leaves a difficult situation for us and the founder of either having to lower our rates and not get paid what we're actually worth or choosing to work with only later stage companies. The solution is equity.
Plus, absolutely more than half the work is what happens after that moment of first launch, and getting through those moments is critical to the product's success and early adoption. It's the kind of work that requires daily (even hourly) communication between founders and engineers. We believe that launching products is a team effort and requires aligned incentives in a way that cash isn't capable of.
In order to solve this, we are refocusing on being a sweat equity partner - an institutional cofounder - rather than a simple vendor or service provider. We think this is better for both us and founders.
Like many companies, we're finding that Slack can be exhausting, even with do-not-disturb in place. As a result, we're limiting Slack communications to only a few clients that we're working with at least half time and to clients that we have significant equity ownership in. Beyond this, we need to keep it to email for our own sanity.
This year has been quite unique in terms of valuations, tech salaries, and inflation. We're finding it harder and harder to retain good talent and keep them motivated throughout the duration of large projects. We're not quite able to reward our team with client equity yet due to the legal complexity of it, but we're definitely looking into it. This is challenging not only because the equity needs to be held by and pass through Thoughtful in an actual fund, but also because much of our team is international. Until we get international client equity figured out, we're going to begin a combination of pay increases and a new experiment of profit sharing with our team on select projects.
We all know that starting a company requires the early team members to wear all hats. As a fractional cofounder, we're realizing that we can offer so much more by helping our clients on all fronts - not just technology. Adding product design as an officially supported talent halfway through the year was a great decision. We are now starting to add fundraising and growth to our service offerings. Initially we will mostly work with partner firms to do this although we are beginning to look at bringing our own team members on as individual contractors.
Up until now, we've mostly worked with founders on an hourly, as-needed basis. This has also lead to quite a lot of difficulty in planning our schedules, retaining good people, and not burning out. Going forward, we will be mainly focusing on retainers which guarantee both us and founders a set number of hours each month along with a pre-determined SLA - the larger the retainer, the quicker the response time.
In addition to focusing on retainers, we're also going to be focusing on working in more of an advisory capacity by hiring directly into our portfolio companies' entities rather than having the team always work through Thoughtful. This will allow our portfolio companies to directly offer equity to their initial hires and take some of the management burden off of us and refocus us on helping founders and early hires set up sustainable management processes instead.
After a busy year, we're very excited to announce that beginning in 2022 we are finally planning on incubating a few products completely and are planning on raising money for these ideas. We're not ready to announce specifically what the ideas are (we've haven't decided yet!) but we do know they will probably be in the legaltech, fintech, community, and creator economy spaces.
We're super excited about what's coming up next and we invite you to reach out if you have any questions or feedback about these changes! Please contact email@example.com.