20VC Framework For Hiring The Best Talent 100% Remotely, Raising $32M From Benchmark and GV PreLaunch and How To Think Through Capital Efficiency and Runway Today with Jeff Seibert and Wayne Chang, CoFounders @ Digits

In the latest episode of 20 Minutes VC, host Harry Stebbings interviews Jeff Cybert and Wayne Chang, co-founders of Digits, a financial software startup that offers real-time expense tracking. Having previously founded Crashlytics, which was acquired by Twitter and subsequently by Google, Cybert and Chang share their journey and the importance of designing intuitive, customer-centric software for "unsexy" industries. They discuss their unique approach to fundraising, securing over $32 million in funding while maintaining a lean operation with a long runway, and their choice to work with specific investors like Peter Fenton at Benchmark. The co-founders also delve into their remote-first company culture, the challenges and strategies of remote work, and their vision for the future of Digits. They stress the significance of building a strong team, focusing on customer needs, and creating delightful product experiences.

• Harry Stebbings introduces Jeff Seibert and Wayne Chang, co-founders of Digits.
• Digits provides real-time understanding of expenses with a simple interface.
• Wayne and Jeff have raised over $32 million for Digits from notable investors.
• Prior to Digits, they co-founded Crashlytics, which was acquired by Twitter and then Google.
• Harry thanks Jess at GV for question suggestions.

"To date, Wayne and Jeff have raised over $32 million for Digits from some of the best in the business, including Peter Phantom at Benchmark and Jeff Virilli at GV, and then also the most incredible base of angels with the founders from Box, GitHub, Tinder, Gusto and more."

This quote highlights the successful fundraising efforts by Wayne and Jeff for their company Digits, emphasizing the high-profile investors and angel investors involved.

• Wayne and Jeff met at a startup dinner in Boston in 2011.
• They co-founded Crashlytics, which quickly grew and was acquired by Twitter.
• Their experiences at Crashlytics and Twitter led them to identify a need for better financial visibility in startups, inspiring them to create Digits.

"We ended up starting Crashlytics together. Just over twelve months after launch, we hit 300 million MAUs and then Twitter acquired us."

This quote summarizes the rapid success of Crashlytics and its acquisition by Twitter, setting the stage for the founders' next venture, Digits.

• Jeff and Wayne's experience with Crashlytics influences their design-first approach to technical products.
• They aim to make technical tools accessible and usable by a wider audience.
• The story of Chamillionaire using Crashlytics highlights the product's reach and impact.

"We took a huge bet, honestly, that taking a really design-first approach to such a deeply technical product would make it far more accessible and ideally, far more usable by a much larger audience."

This quote explains the philosophy behind their design-first approach, which they believe makes complex tools more accessible and has been carried over to their work on Digits.

• Time to value is a crucial element in the design of Digits.
• Wayne emphasizes the importance of an efficient onboarding experience.
• Digits aims to drastically reduce setup time compared to competitors.

"Others take months or like as little as 14 months. So it's 2020. That doesn't have to be the norm. And so we're set out to improve that."

Wayne criticizes the lengthy setup times of competitors and expresses Digits' commitment to streamlining this process, showcasing their focus on user experience.

• A focus on customer value was a key element of success at Crashlytics.
• They avoid internal politics to maintain a customer-centric approach.
• Delivering customer value is a priority that aligns the team and reduces drama.

"The focus of every week was hey, what are we delivering for customers this week? And how can we make their lives better?"

Jeff emphasizes the importance of constantly delivering value to customers, a practice that has been fundamental to their approach and is being applied at Digits.

• The technical foundation of Crashlytics posed scalability challenges.
• They had to rewrite major pieces of the platform to handle growth.
• For Digits, they have adopted a different technical approach to avoid past issues.

"A huge struggle for us to scale. And so we ended up rewriting major pieces of it just in the first year as we got to 300 million devices."

Jeff reflects on the difficulties faced with scaling Crashlytics due to the initial technical choices and how this experience has informed their approach with Digits.

• Digits is designed with security, correctness, and scalability as top priorities.
• The technology stack is chosen for type safety and uses encryption throughout.
• Architecture is based on microservices that can scale independently.
• Initial development is slower due to the focus on long-term stability and scalability.

"So we're building financial software. We take that responsibility extremely seriously. So it has to be secure, it has to be correct, and it has to scale."

This quote emphasizes the importance of security, accuracy, and scalability in financial software, which is the core focus of Digits' development philosophy.

• Digits adopted a remote team model from day one, which has proven to be very productive.
• The remote work approach is results-oriented and eliminates unnecessary office-related processes.
• The biggest challenge was figuring out how to manage product development remotely, especially brainstorming and collaboration.

"For me, working remote is fantastic. It's very, very results oriented."

Wayne Chang expresses his positive experience with remote work, highlighting its focus on results over processes.

"The unknown, honestly, to us, was the product side."

Jeff Seibert acknowledges the initial uncertainty about managing product development remotely, which was a significant challenge for Digits.

• Digits faced challenges with remote product management, specifically with brainstorming and whiteboarding.
• Found a solution in an app called Pixelboard, which allows real-time collaboration and lightweight gesturing.
• This technology enabled effective remote product brainstorming and wireframing.

"We found out about this app called Pixelboard, and we both bought iPad pros... and I don't think I've been to LA since."

Jeff Seibert discusses how Pixelboard revolutionized their remote product development process, eliminating the need for in-person meetings.

• Digits recognizes the potential mental health challenges of remote work, such as loneliness.
• They hold all-hands meetings every 48 hours to maintain team connection and morale.
• Avoids excessive Zoom meetings to preserve creative time and prevent meeting fatigue.

"So we don't do it daily... we've found every 48 hours works well."

Jeff Seibert explains Digits' approach to maintaining team morale with regular but not daily all-hands meetings.

"That's the worst way to work remote... We only have three meetings a week that are required."

Wayne Chang criticizes the practice of replacing office meetings with constant Zoom calls, advocating for a balance that favors remote work's strengths.

• Digits uses a buddy system where pairs or small groups tackle projects synchronously.
• This system provides a social component and reduces the need for scheduled meetings.
• Communication between different teams is asynchronous, allowing for flexibility.

"Our pairs basically work on their work together synchronously on audio or video chats."

Jeff Seibert describes the buddy system, which facilitates social interaction and collaboration within remote teams.

• Digits uses a take-home work sample for all roles to assess candidates' skills.
• They also use top grading to understand candidates' work styles and team fit.
• Offers are made remotely with high conviction based on the candidate's skills and work style assessment.

"We have used basically a take home work sample... and then on the how you work, we use a technique called top grading."

Jeff Seibert explains the hiring process at Digits, which includes practical work samples and a thorough background exploration called top grading.

• Digits believes in minimalist design, removing unnecessary elements for a better user experience.
• The design philosophy is not about following trends but about focusing on what benefits the user.

"Ever since Apple introduced iOS back in 2013, it feels like the software world has moved more and more towards minimalist design."

Wayne Chang reflects on the industry trend towards minimalist design, which influences the product experiences at Digits.

• Products should be designed to provide the best user experience with minimal cognitive load.
• The goal is to create products that are intuitively easy to use, regardless of whether they adhere to minimalism or maximalism.
• Digits has innovated by creating visually immersive, full-color financial software.

"So these result in being the most magical for them when we think about it from that frame. And so when I frame the product in that way, sometimes being minimalism may work in that moment, but most often it does not. It tends towards maximalism."

This quote emphasizes that the focus should be on creating a magical user experience, which might not always align with minimalist design. The speaker suggests that sometimes a maximalist approach is more effective.

• There is a debate on whether reducing the number of clicks enhances user experience.
• Reducing steps might lead to a loss of context and missed opportunities for delighting users.
• Product design should focus on the users and their interaction with the tools, not just on minimizing clicks.

"Sometimes by reducing the number of clicks, the user may lose context. They might not know why. And so you're missing opportunities of delight."

This quote highlights the potential downside of reducing user interactions without considering the overall user experience. It suggests that more steps might sometimes be necessary to maintain context and provide a satisfying experience.

• The financial software market has been stagnant, using black and white spreadsheet reports.
• There's a need for actionable reports in real-time, not just faster delivery of traditional reports.
• Digits challenges the status quo by questioning why reports are received in the way they are.

"Bluntly, they've been using these black and white spreadsheet papers forever and it's a gift that keeps on giving. Unfortunately, you have these archaic reports that aren't super actionable, especially in the moment in this day and age when we need to react."

This quote criticizes the outdated methods in financial reporting and underscores the necessity for innovation that provides actionable insights in real-time.

• The design of financial tools has been historically limited by what can be physically printed.
• There is an opportunity to innovate by discarding the constraints of physical documentation.

"That realization that so much of this world has been guided by what can be physically printed, like, we can throw that out the window."

The quote points out that the digital transformation allows for a departure from the limitations of physical printing, opening up new possibilities for software design.

• Fundraising should be tailored to the market dynamics and the specific vertical of the business.
• Digits' approach to fundraising was influenced by their long-term vision and the massive potential of their market.
• They raised a significant amount of money but maintained a lean operation to extend their runway.

"We took advantage of the eager funding environment over the past couple of years and honestly went out to secure what we'll need to go build the business."

This quote explains the strategic move to secure funding while the market conditions were favorable, ensuring the company has the resources to build and grow.

• Scaling should be done in response to clear signs of product-market fit.
• Premature scaling is risky and can be detrimental to the business.
• Digits plans to scale their team to capitalize on their market opportunity following a successful launch.

"Sign of product market fit. So while you were in an uncertain phase, while you're sort of proving out the concept, I would be extremely conservative with spend because you want to preserve optionality in the case you do need to pivot."

This quote advises on being conservative with spending until there is a clear indication of product-market fit, preserving the ability to pivot if necessary.

• The choice of investors can be influenced by personal relationships and the investor's business acumen.
• Digits chose Peter Fenton as an investor due to a decade-long relationship and his insights into building businesses.

"So we've known Peter for over a decade. He was actually my randomly assigned mentor in a Stanford class in 2007."

The quote reveals the personal connection and long-standing respect for the investor, which influenced the decision to work with him.

• Digits did not intentionally choose stealth mode; they simply didn't discuss their product until it was ready.
• Announcements should be made when they can benefit the company, not for vanity reasons.
• The complexity of the financial space required a focus on product development before announcing.

"We just chose not to talk about the product until it was ready for customers."

This quote explains that Digits' silence was not a strategic choice for stealth but a focus on product readiness before making any public announcements.

• Digits strategically included a large number of angel investors who are founders themselves to learn from their experience.
• Angel investors can help vouch for and distribute the product.

"We really wanted to assemble the best list of founders we could in order to learn from their experience and to get their support in helping vouch for and distribute the product."

The quote illustrates the rationale behind selecting angel investors who could contribute more than just capital, by leveraging their expertise and networks to support the business.

• The significance of people over technology in the startup industry is emphasized.
• Building a great team is crucial and can lead to long-term collaboration.
• The Crashlytics team's transition to the Digits team exemplifies the lasting impact of a strong team.

"The people matter more than anything else."

This quote highlights the lesson that individuals and relationships are more valuable than the technology or software in the startup ecosystem.

• Trust and respect are foundational to successful business partnerships.
• A strong partnership allows each individual to focus on their strengths and what they care most about.
• Wayne expresses gratitude for being able to focus on customers without worrying about the technical aspects due to his trust in Jeff.

"There's an intense amount of trust and respect that I have for Jeff."

Wayne articulates the deep level of trust and respect he has for his business partner, Jeff, which is a cornerstone of their successful working relationship.

• Jeff and Wayne have a partnership where they trust each other's expertise in different areas of the business.
• This division of labor allows them to focus on what they excel at individually.
• Jeff trusts Wayne to handle customer acquisition and market distribution, while Jeff concentrates on technology and product development.

"We completely trust each other with our sides of the business and we sort of meet in the middle on product."

Jeff describes the effective dynamic between him and Wayne, where mutual trust in their respective domains leads to a cohesive product strategy.

• Wayne's superpower is his customer-focused approach to product experiences.
• His weakness is the challenge of delegation due to his desire for perfect customer experiences.
• This customer-centric philosophy drives the company's strategy from initial awareness to repeat business.

"My North Star, as you can tell, is just purely customers."

Wayne's quote encapsulates his guiding principle in company building, which is a relentless focus on the customer experience.

• The venture industry faces challenges with visibility and valuation of private company investments.
• There is a need for better tooling and transparency for founders and investors to track their portfolios.
• The current systems with outdated spreadsheets and basic quarterly reports are inadequate.

"The biggest challenge is still visibility."

Jeff identifies visibility as the primary obstacle in the venture capital space, stressing the need for improved tools and transparency for valuation and portfolio management.

• VCs can provide value by focusing on strategic issues that are important but not urgent.
• Founders often get caught up in day-to-day operations, losing sight of the bigger picture.
• A good VC helps founders prioritize strategic planning and long-term vision.

"I would say by drawing your attention to what's important, but not urgent."

Jeff explains the most beneficial role of a VC, which is to guide founders towards strategic issues that may not be immediately pressing but are crucial for long-term success.

• Wayne's view of success is influenced by Warren Buffett's approach to life and work.
• Success is having control over one's time and being surrounded by people who care about you.
• This perspective shapes Wayne's approach to business as a collaborative game.

"The way he defines success at the end of life, not by wealth or anything materialistic, but by the number of people around you that care about you."

Wayne quotes Warren Buffett's definition of success, which he adopts as a more meaningful measure than material wealth.

• Wayne hopes to continue creating delightful product experiences that empower businesses.
• Jeff wants Digits to be an essential tool for business owners across various industries.
• Their goal is to provide businesses with the right tools to strengthen their operations.

"I want digits to be at the heart of every business of every size on earth."

Jeff envisions Digits becoming an indispensable resource for business owners, highlighting the universal need for better tools in finance and operations.

• Harry Stebbings expresses excitement for Wayne and Jeff's journey with Digits.
• Wayne and Jeff are grateful for the opportunity to share their experiences and insights on the podcast.

"Thank you so much for having us. It's always great fun to hang with you."

Jeff and Wayne thank the host for the enjoyable discussion, reflecting the positive relationship and shared experiences throughout the podcast episode.