20VC What Is Core To The Best Investor Founder Relationships, The Biggest Risk For Founders In The Early Days & Why EQ Is The Most Important Trait For Managers with Jack Altman, Founder & CEO @ Lattice

In the final episode of a special feature week, Harry Stebbings interviews Jack Altman, CEO of Lattice, a performance management solution for growing companies. Altman reflects on his journey from Teespring to founding Lattice, discussing the importance of assembling a core team that can drive a startup from idea to product-market fit. He emphasizes the necessity of hiring people who are better than oneself and the role of investors in providing strategic advice and trust. Altman also touches on the challenges of fundraising, the significance of customer feedback in product development, and the value of emotional intelligence in management. The conversation covers the delicate balance between vision and market response, and the critical nature of employee equity in the startup ecosystem.

• This is the third and final episode of a special feature week.
• The podcast is focused on Y Combinator and features Harry Stebbings and Jack Altman.
• Harry Stebbings is known for his work on the 20 Minute VC and is active on Snapchat.
• Listeners are encouraged to share their thoughts and feedback on the week's shows.

"Welcome back to the third and final episode of this very special feature week."

The quote indicates the context and significance of the episode, marking it as the conclusion of a series dedicated to Y Combinator.

"On the incredible Y combinator on the 20 minutes VC with me, Harry Stebings at H stepbings with two B's on Snapchat."

Harry Stebbings introduces himself and his association with Y Combinator and the 20 Minute VC podcast, also mentioning his Snapchat handle for listener engagement.

• Jack Altman is the founder and CEO of Lattice, a performance management solution for growing companies.
• Lattice has raised close to $10 million in funding from notable industry figures and organizations.
• Jack Altman has a history as the head of business development at Teespring and has an impressive angel investment portfolio.

"Jack is the founder and CEO of Latice."

This quote introduces Jack Altman and his current role as the CEO of Lattice.

"Prior to founding Latice, Jack was the head of business development at Teespring, where he saw the firm move into hypergrowth mode."

The quote provides background on Jack's experience at Teespring, highlighting his role during a period of significant growth for the company.

"Angel portfolio, including the likes of Gusto, Opendoor, Instacart, Xenophys, and Soyland, just to name a few."

This quote lists some of the successful companies in which Jack has invested, showcasing his acumen as an angel investor.

• Lattice is a partner of the show and offers a performance management solution.
• The platform includes features like 360 performance review cycles, continuous feedback, OKR goal tracking, and one-on-one meetings.
• Lattice aims to help with hiring executives, developing managers, and retaining top talent.

"Lattice is the number one performance management solution for growing companies."

The quote emphasizes Lattice's market position as a leading performance management solution for companies experiencing growth.

• Recurly provides an enterprise-class subscription management platform that helps increase revenue and reduce churn rates.
• The platform is trusted by many customers, including Twitch, HubSpot, and CBS Interactive.

"Recurli's enterprise cost subscription management platform providing rapid time to value without requiring massive integration effort and expense."

This quote highlights Recurly's value proposition, focusing on its ease of integration and the benefits it offers to enterprise customers.

• Jack and his co-founder experienced hypergrowth at Teespring, which informed their understanding of team communication and management needs.
• Lattice was founded in 2015 with an initial focus on goal management tools but evolved based on customer feedback and needs.
• The company pivoted to performance reviews, which became a critical offering, and later added a suite of tools including employee feedback.

"So we started with a tool that did goal management across companies... we realized that what we really wanted to do with our goal setting tool was to make companies more effective."

This quote explains the original purpose of Lattice's tool and the broader mission to enhance company effectiveness.

"We wiggled our way towards this kind of full suite, and that became latice."

Jack describes the iterative process of developing Lattice's product offerings, ultimately leading to a comprehensive suite of performance management tools.

• Harry Stebbings intends to discuss three key elements of business effectiveness: team, product and customer interaction, and funding.
• The conversation aims to explore the importance of these elements in building a successful business.

"I want to break the interview today up into three elements, all based around business functioning and business effectiveness."

Harry Stebbings outlines the structure of the interview, focusing on the critical aspects of business effectiveness.

• Jack emphasizes the challenge of attracting top talent to a startup with limited resources.
• He advises doing whatever it takes to bring key people on board, as they are essential for moving the company from nothing to something.
• Creative solutions and leveraging networks are important strategies for assembling a core team.

"You have to sort of just do anything, hell or high water. You have to just find excellent people to somehow work with you."

Jack stresses the necessity of going to great lengths to recruit the right people who can contribute significantly to the startup's success.

"How do you get the other four or five core people around that it often takes to get something from nothing to off the ground?"

This quote raises the question of how to build a foundational team that can propel a startup from its inception to a viable enterprise.## Composition of Early Startup Teams

• Different companies require different compositions of early team members based on the product or go-to-market strategy.
• For Jack Altman's company, the early team consisted of six core members: two co-founders, two engineers, a marketer, and a sales rep.
• This team was able to progress the company from lacking product-market fit to the beginnings of achieving it.
• Other companies may have a different mix, such as all engineers or specialists in a particular field like finance or healthcare.
• The essential idea is to have a "group of avengers" that possess the necessary skills to build the product, communicate the story to customers, and sell the product.

"In our case, there was about six of us. So it was me, my co-founder, two other engineers, a marketer and a sales rep. And the six of us were able to basically take us from not having product market fit to now, in hindsight, what was the beginning of product market fit?"

This quote explains the composition of Jack Altman's early startup team and their role in moving towards product-market fit. It highlights the importance of a balanced team that can handle different aspects of the startup's needs.

• There are two distinct phases in a startup's early life: before and after finding an early version of a product that customers truly want.
• Before achieving product-market fit, the focus should be on building something people want.
• Co-founders alone might suffice if they can reach product-market fit; otherwise, additional team members who can contribute to this goal should be recruited.
• It is important not to scale prematurely but to have a well-rounded team to reach product-market fit.

"So the only thing that matters before you've got that is, how can I build something people want?"

This quote emphasizes the singular focus of a startup before achieving product-market fit, which is to create a product that meets customer needs. It underlines the importance of assembling a team capable of reaching this critical milestone.

• Having reputable investors can make a company more attractive to potential hires.
• Investors like Thrive or Benchmark on the cap table signal to potential employees that due diligence has been conducted by experienced professionals, suggesting the startup is a good bet.
• While high-profile investors can help attract talent, it’s also important to ensure that candidates are not solely influenced by the investors but also believe in the company's vision and team.

"So for better or for worse, if you have miles from thrive or say, benchmark or some great firm on your cap table, that indicates to employees that the homework has already been done by people who have much more experience than them, and that you're probably a good bet to take."

This quote discusses the role of prominent investors in the hiring process, suggesting that they serve as a form of validation for potential employees, indicating that the startup has been vetted and is considered a promising opportunity by knowledgeable individuals.

• The best employees prefer ownership and autonomy over micromanagement.
• Leaders should provide clarity and focus, particularly in the early stages when distractions are plentiful.
• Micromanagement may be necessary in certain situations, such as role adjustments, but if it persists, there may be underlying issues that need to be addressed through communication.
• The key to successful early-stage leadership is setting a clear vision, prioritizing effectively, and removing obstacles for team members to excel in their roles.

"I think that the best thing that you can do is sort of vision set and clarify priorities and then get everything out of the way for your people so that they can do what you have them there for."

This quote highlights the importance of leadership setting a clear vision and priorities to help team members focus on their responsibilities without unnecessary interference, thereby fostering a productive and autonomous work environment.

• Establishing trust and compassion is fundamental to providing effective feedback.
• Kim Scott's concept of Radical Candor suggests that direct feedback can be caring and supportive when delivered with the right tone and emotional intelligence.
• Clarity, compassion, and support are key when giving feedback to ensure it is received well and acted upon.
• Emotional intelligence (EQ) is considered a critical trait for managers to deliver feedback effectively.

"So I think a lot of feedback has to do with, number one before you give the feedback, establishing trust with the person you're giving feedback to, and then speaking with a certain compassion."

This quote underscores the necessity of building trust and communicating with compassion when giving feedback, as these elements contribute to feedback that empowers and motivates employees rather than demoralizing them.

• The transition from having a product nobody wants to achieving product-market fit is described as a "night and day flip."
• Early startup days are often filled with rejection and hope can be mistakenly placed on any positive interest.
• True product-market fit is indicated by customers urgently requesting features and expressing dependency on the product for their needs.
• Founders should be wary of confusing initial interest with genuine product-market fit.

"What we heard once we launched a product that people really wanted was, instead of sounds cool, I'll check it out. We heard people say, hey, I need that by Monday, and I need you guys to ship feature X, Y and Z."

This quote captures the qualitative shift in customer feedback that occurs when a startup achieves product-market fit, moving from casual interest to urgent demand, which is a strong indicator of a product's value to customers.## Customer Demand and Product-Market Fit

• Identifying genuine customer demand is crucial for product success.
• Entrepreneurs should distinguish between "cool" ideas and those that customers urgently want.
• Customer eagerness to use a product is a strong indicator of demand.
• Peter Reinhardt's experience highlights the importance of shipping a product to reveal clear demand.

"That was such a different feeling, and I had never heard that before. Peter Reinhardt, from segment I know, spoke about this in a presentation where he had an experience where they didn't have something, and then all of a sudden they shipped and know very clear demand for something quickly."

The quote reflects on the transformative experience of witnessing immediate and clear customer demand upon releasing a product, as shared by Peter Reinhardt, which serves as a lesson in differentiating between cool ideas and those with genuine market desire.

• The challenge of knowing when to pivot or persevere with a product is complex.
• A vision should be tested against market realities and adjusted accordingly.
• Lattice maintained its vision while changing strategies to fulfill its mission, exemplifying adaptability.
• Stubbornness on the vision is acceptable, but flexibility in the approach is necessary.

"But one of the frameworks that I have is that a vision really shouldn't live in a vacuum. It should live in and be constantly bumping up against reality."

Jack Altman emphasizes that a vision should be grounded in reality and subject to adjustment based on market feedback, illustrating the importance of adaptability in the pursuit of a company's mission.

• Competition should not distract from the primary focus on customers.
• Learning from competitors is less important than understanding customer needs.
• A company's success is determined by customer satisfaction, not by outdoing competitors.
• The ideal scenario is where competitors are focused on your company, but your company is focused on customers.

"Our competitors aren't the people who pay us, our customers are the people who pay us."

Jack Altman advocates for prioritizing customer needs over obsessing about competitors, suggesting that customer satisfaction is the key to a company's success and should be the main focus.

• Founders need a clear vision, strategy, and principles for their company.
• Decisions about customer types, company size, and customer satisfaction levels are crucial.
• Convincing the team of the company's vision and strategy is essential for cohesive decision-making.
• A founder's role includes ensuring team members understand and believe in the company's direction.

"So what kind of customer do you serve? What type of company does that customer work at? What matters to you most and why?"

Jack Altman highlights the importance of defining the target customer and company values, which provides a framework for making strategic decisions and guiding the team towards a unified goal.

• Strategic advice from investors can be more valuable than other forms of support.
• Founders should seek investors who can challenge their thinking and contribute to key strategic decisions.
• Trust and comfort in the investor-founder relationship enable open and effective discussions.
• The best investor relationships are informal and built on mutual trust, similar to those with co-founders or team members.

"But one of the things that I find the very most valuable about investors is if they're able to truly incredibly challenge your thinking when you're making your most important strategic decisions."

Jack Altman expresses the value of having investors who provide meaningful strategic advice and challenge the founder's thinking to refine the company's strategic decisions.

• Effective communication with investors is based on trust, not formality.
• Investors should feel comfortable sharing their thoughts directly, regardless of the setting.
• Trust ensures that even aggressive debates are understood to be in the company's best interest.
• A good investor relationship allows for open communication without concern for formalities.

"I think that great relationships with your investors should have a level of trust where it's not some big deal about how you communicate the information."

Jack Altman describes his preference for a trust-based, informal communication style with investors, which allows for candid discussions and swift strategic alignment without being hindered by formalities.## Investor Meetings Concerns

• Misaligned incentives between investors and company interests can be problematic.
• The presence of ego or professional incentives that conflict with the company's best interest is a red flag.
• It's important to ensure investors are willing and able to act in the company's best interest long-term.

"So one of the things I'm always looking out for when I meet with investors is potentially misaligned incentives, which I think can come in the form of generally either ego or certain professional incentives."

This quote highlights the importance of aligning incentives and being cautious of investors' motivations that could conflict with the company's goals.

• Luck plays a significant role in successful fundraising.
• Having the same investors from the seed round through Series A can be advantageous.
• Including large funds in early rounds can pose a signaling risk but also has benefits if things go well.

"We got pretty lucky to get such good investors in, both at the seed and then in our case, that also it was the same investors who did our series a."

This quote reflects on the element of luck in securing good investors and the benefit of continuity between funding rounds.

• Taking on large funds early can lead to future challenges if they do not continue their support.
• There's a trade-off in including prominent investors early, as it can affect future fundraising.

"We took on some signaling risk by including large funds like Thrive and Kosla in our seed round."

The quote explains that while there are risks associated with involving big-name investors early, it was a calculated risk based on the desire to work with those particular investors.

• "Meditations" is recommended for its calming nature and truthful content.
• The book is considered a good read for a plane ride.

"I would read meditations. I think it's very calming and I just think there is so much truth in it."

This quote provides a personal book recommendation, suggesting that "Meditations" is a valuable read for its calming effect and profound insights.

• Hiring people better than oneself is the fastest way to advance in a company.
• This strategy is often avoided due to fear but is essential for rapid career progression.

"I think that as an employee at a company, the fastest way to move up is to hire people who are truly better than you."

The quote conveys the belief that hiring superior talent is key to personal career advancement within a company, despite common hesitations to do so.

• Early-stage companies do not require excessive capital or high valuations.
• Raising too much money at an early stage can be a disservice to founders.

"At the very early stage of a company, you don't need that much capital and you don't need that high of a valuation."

This quote expresses disagreement with common industry advice, emphasizing that modest funding is often more beneficial for early-stage companies.

• Sibling relationships can be significant sources of mentorship and guidance.
• The speaker's older brother Sam is considered a go-to mentor.

"It's probably my older brother Sam... And it came about because we had the same mother."

The quote illustrates the personal nature of mentorship, with the speaker's older brother being a key figure in providing support and advice.

• Employee equity should be more favorable to reflect their role in the ecosystem.
• Current equity structures for employees in startups are seen as suboptimal.

"I would love to see ways for employee equity to continue to get friendlier."

This quote expresses a desire for improvements in employee equity structures within startups and VC, advocating for better terms for employees.

• The goal is for Lattice to become a significant and impactful company.
• The speaker hopes to continue learning and maintaining their current position.

"I hope Lattice is a big and impactful company and I hope that I personally have managed to learn fast enough to still have the job I have today."

The quote outlines the speaker's aspirations for both their company and personal growth over the next five years.