20VC Why Founders Must Use VCs as a Barometer, How to Make Distributed Teams Work Successfully & The Biggest Mistake People Make Early In Their Career with Dylan Serota, Founder @ Terminal

In this episode of "20 minutes VC," Harry Stebings interviews Dylan Sarota, cofounder and Chief Strategy Officer at Terminal, a company that facilitates the creation of technical teams through remote operations as a service. Sarota highlights the advantages of distributed engineering teams, noting how Terminal, which recently raised a $13 million Series A, is redefining the future of work. He emphasizes the importance of market selection, leadership, and making remote teams feel like first-class citizens. Sarota also discusses career growth, advocating for gaining experience across different disciplines within a single company to build a robust foundation for future leadership roles. The episode delves into the philosophical and practical aspects of remote teamwork, the value of mentorship, and the balance between prototyping patience and operational speed, offering insights into building successful, geographically diversified teams.

• Harry Stebbings hosts the 20 Minute VC podcast, expressing excitement for the current episode.
• He acknowledges the personal value of friendships formed through the show.
• Harry praises the team at Atomic for their talent and genuineness.
• Dylan Serota, cofounder and Chief Strategy Officer at Terminal, is introduced.
• Terminal is a startup that offers remote operations as a service for building technical teams.
• Terminal's Series A funding included renowned investors like Lightspeed, Kleiner Perkins, and others.
• Dylan's background includes founding Atomic and being the head of platform at Eventbrite.
• Thanks are given to Andrew Dudham at Hymns and Kevin Hartz at Eventbrite for their contributions.

You are listening to the 20 minutes vc with me, Harry Stebbings, and I'm so excited for our episode today.

Harry Stebbings expresses his excitement for the episode, setting the tone for the podcast.

However, enough of the soppy stuff and to the intro, and I'm thrilled to welcome Dylan Sarota, cofounder and chief strategy officer at Terminal.

Harry transitions from his personal reflections to introducing the guest, Dylan Serota, highlighting his current role at Terminal.

• Harry promotes The League, a dating app that values high standards and privacy, mentioning its unique features.
• Zoom is mentioned as a top-rated conferencing app, praised for its ease of use and affordability.
• Culture Amp is introduced as a platform for employee feedback, used by notable companies like Slack and Nike.
• These services are recommended based on their quality and relevance to the audience.

Well, the league is the app that tells you to keep them. That way they know your time is valuable, so simply tell them your preferences and they will handle the scouting and vetting for you.

Harry describes The League's approach to dating, emphasizing its respect for user preferences and time.

Zoom is the top rated conferencing app across various user review sites, including g2, crowd and trust radius.

Harry endorses Zoom as a highly regarded conferencing app, citing user reviews as evidence.

So put your people and culture first and find out more now on Cultureamp.com.

Harry highlights Culture Amp's focus on employee feedback and culture, encouraging listeners to learn more.

• Dylan Serota expresses his enthusiasm for being on the show.
• Harry jokes about a future bitcoin payment for Dylan's compliment.
• Dylan shares his journey to co-founding Terminal and the motivations behind it.
• The importance of timing and the right people in launching Terminal is emphasized.
• Dylan's experience at Eventbrite, especially with remote development in Mendoza, Argentina, is detailed.
• The challenges of scaling global teams traditionally are outlined.
• Dylan's realization of the opportunity for a platform to simplify remote operations led to the founding of Terminal.
• The collaboration with Atomic and Joe Lonsdale is mentioned as key to Terminal's inception.

Sure thing. And there were a lot of people involved and timing was so important to make this happen so quick.

Dylan acknowledges the importance of collaboration and timing in the rapid development of Terminal.

My aha moment was when I realized that there's actually an incredible opportunity to create a company that could simplify this process by thinking about providing a platform that could take on a lot of the large upfront costs of real estate and other services and complexities involved, and create basically an AWS for remote operations.

Dylan shares the pivotal realization that led to the creation of Terminal, likening it to an AWS for remote operations.

• Dylan discusses the common mistake of leaving a company too soon in one's career.
• He suggests a minimum tenure of four years to gain substantial business-building experience.
• Dylan references the average tenure in the valley and contrasts it with his recommended duration.
• The concept of a "modern MBA" is introduced, involving hands-on experience within a company.
• Advice from mentor Dave Potruk on prioritizing experience over title and salary is shared.
• Dylan emphasizes the importance of building a foundation of experience for future success.

Absolutely. I think one of the biggest mistakes people make early in their career is leaving a company too soon.

Dylan advises against the common practice of leaving companies prematurely, emphasizing long-term learning and growth.

And he told me after graduating that you got to maximize experience over title and salary until your early thirty s and basically get an amazing foundation of experience to maximize what will ultimately be your highest grossing years.

Dylan relays career advice from his mentor, Dave Potruk, stressing the importance of gaining experience over immediate rewards.## Career Development in Varied Disciplines

• Focusing on gaining experience in various disciplines is crucial for building a company or becoming a CEO/COO.
• Staying at a company can serve as a platform for career development, allowing for exposure to different business functions.
• Proving oneself within a company can lead to opportunities to experience the range of functions necessary for creating a sustainable business.

"But if you want to build a company or be a CEO coo, I think you should focus on getting experience in different disciplines, like sales, marketing, finance."

This quote emphasizes the importance of a diverse skill set for aspiring CEOs and COOs, suggesting that experience in multiple business areas is beneficial.

• Leaving a secure position to pursue one's own venture is a significant and challenging decision.
• Having open and supportive conversations with mentors or leaders can provide the confidence needed to make a career change.
• The decision to leave a familiar environment should be made at the right time, with the right support.

"It was absolutely the right time to make a change."

Dylan Serota reflects on his personal experience of leaving Eventbrite, indicating that the timing and support he received were crucial in his decision to pursue his passion with Terminal.

• Building a company solely in one market, such as Silicon Valley, has become increasingly unsustainable.
• Geographically diversified teams are seen as essential for long-term competitiveness and risk mitigation.
• Early-stage companies are encouraged to develop the capability to build remote teams from the outset.

"So we believe geographically diversifying or building teams across multiple markets is a muscle memory that you should start building much earlier than conventional wisdom would suggest."

Dylan Serota argues for the strategic importance of establishing geographically diverse teams early in a company's growth to enhance sustainability and talent acquisition.

• Market selection is critical when establishing remote teams, considering factors such as talent pool size, incumbents, technology trends, universities, time zones, and travel ease.
• Strong initial leadership is essential for the success of remote teams, with senior tech leads playing a pivotal role in hiring and team foundation.
• Remote teams should be given full product ownership to feel like equal contributors, which is vital for establishing trust and a sense of value within the company.

"So there's many aspects here. I think, first, market selection is key."

Dylan Serota discusses the multifaceted approach to creating successful remote teams, highlighting market selection and the importance of strong leadership and product ownership for remote teams.

• Time zone alignment is a significant factor in ensuring seamless communication between distributed teams.
• Adopting communication technologies and over-documenting decisions are practices that can aid in maintaining clarity and transparency across teams.

"One of the, I think, most important factors is time zone alignment."

Dylan Serota identifies time zone alignment as a critical element for effective communication in remote teams, emphasizing the need for synchronous communication opportunities.

• Companies often overvalue their current culture and undervalue the potential for its evolution.
• Culture should not be static; it should evolve with the team and adapt to new inputs and perspectives.
• When building remote teams, it is as important to import culture from new markets into the headquarters as it is to export the existing culture.

"That culture should not be stagnant or overly preserved. It should evolve with the team that you build."

Dylan Serota shares insights on company culture, advocating for a dynamic approach that allows culture to grow and change with the team, especially in the context of remote teams.

• Companies often wait too long before deciding to establish a remote office, which can place undue pressure on engineering leadership.
• The rapidly changing global talent ecosystem necessitates a fresh approach to establishing remote teams.
• Engineering leaders may be diverted from their primary responsibilities to address the logistical and operational challenges of setting up remote offices.

"And so when you end up putting that into the engineering leadership and to juggle all of those different balls, that's definitely, I think, the biggest challenge and the commonality that we see when companies are deciding to establish a remote team."

Dylan Serota highlights the common challenges faced by companies when establishing remote offices, particularly the strain it places on engineering leadership who must manage multiple complex tasks beyond their normal scope of work.## Distributed Teams: Philosophical vs. Practical Hurdles

• Companies often perceive the transition to remote work as a readiness issue rather than a practical one.
• Technologies and practices supporting remote work are more accessible and effective than ever before.
• Experimenting with remote work on a smaller scale can help organizations realize their existing capabilities.
• Tools like Slack, Jira, and video conferencing are already in use, facilitating the shift to remote operations.

"Philosophically, we hear that companies know they will need a remote team at some point, but think that they're just not quite ready or not quite set up to make it successful yet."

This quote emphasizes the mental barrier companies face when considering remote work, suggesting it's a matter of perception rather than actual preparedness.

• Distributed teams can be seen as a competitive advantage during acquisitions.
• Having established operations and a remote team in place can increase a company's desirability and value to potential acquirers.

"And part of the reason that they were a very desirable acquisition target was purely because they had that team in place in Waterloo that had already been established, the operations were set up."

Dylan Serota explains that having a distributed team can make a company more attractive to acquirers, as it demonstrates established operations and potentially lowers integration costs.

• Early-stage startups should hire for immediate needs rather than potential future requirements.
• Jacks of all trades are preferred over experts from incumbents due to their adaptability and potential for growth.
• It's important to consider candidates' ability to learn and scale with the company.

"So as a company, you don't want to be a jack of all trades master of none. But with early stage employees, I actually think that those who are less expert but exhibit more interdisciplinary skills can show a higher upper cap on their learning and adaptability."

Dylan Serota advocates for hiring versatile employees at early stages who can adapt and grow with the company, rather than hiring specialized experts right away.

• Not everyone scales at the same rate within a company.
• Leadership should identify and nurture employees who have the potential to grow with the organization.
• Retaining and supporting these individuals contributes to a company's overall success.

"Everyone doesn't scale at the same linear rate. But I think it's important for leadership to find the people who have that aptitude and continue to give them opportunity and resources to learn and grow."

Dylan Serota stresses the importance of recognizing employees' varying capacities for growth and providing them with opportunities to evolve alongside the company.

• Speed of decision making is crucial, especially when information is imperfect.
• Regularly reviewing decision-making processes can improve speed and efficiency.
• The OODA loop (observe, orient, decide, act) from military strategy is applicable to startup decision making.
• Leadership should focus on both the outcomes and the processes of decisions.

"So this is probably the biggest area of my own development. I've had to work on transitioning into founding terminal. But as a leadership team, we examine and scrutinize our decisions weekly, not just based on the outcomes of the decisions, but how quickly we were able to make those decisions, and how could we speed up that process in the future?"

Dylan Serota discusses the importance of not only the outcomes of decisions but also the speed at which they are made, suggesting regular introspection to enhance decision-making processes.

• Weekly reviews of decisions should focus on the decision-making process rather than just the outcomes.
• Clarifying ownership and responsibility is crucial for efficient decision making.
• For distributed teams, clear vision and ownership are essential to compensate for the lack of physical proximity.

"So when we go back on a weekly basis and look at some of those decisions, we're trying to separate outcomes from process and then speed up the process or clarify ownership across the team to make those decisions happen faster."

Dylan Serota explains the process of assessing decision-making effectiveness, highlighting the distinction between outcomes and the decision-making process itself.

• There's a tactical aspect to decision-making speed and a strategic aspect to developing the right business model.
• Prototyping should be done quickly but without rushing to market until there are strong indicators of product-market fit.
• Once confident in the product and business model, accelerating go-to-market and operational decisions is key.

"So I think the prototyping phase is critical to test quickly, but not rush to market. Until you really believe you have the right signals that the product and the business model are right."

Dylan Serota discusses the importance of balancing the need for speed in prototyping with the necessity of ensuring product and business model viability before scaling up operations.

• Clear goals, ownership, and accountability are necessary for effective decision making.
• Trusting the team to make decisions, even if not always correct, can lead to better outcomes through action and adjustment.
• The mantra "move fast and break things" is not favored; instead, a structured approach to decision making is preferred.

"I don't love that phrase. I will say, I think that what you need is really clear goals of what you want to accomplish. You need clear ownership and accountability. And then you got to trust in your team to make decisions which might not always be right."

Dylan Serota expresses his distaste for the "move fast and break things" philosophy, advocating for a more considered approach to decision making with clear goals and ownership.## Speed and Decision Making

• Emphasizes the importance of speed in decision-making.
• Suggests a critical approach to product development, avoiding excessive focus on perfection.

I do believe in speed and decision making, being hypercritical in.

The quote underlines the speaker's belief in the importance of swift decision-making and critical analysis in the product development process, suggesting that perfection may not always be the primary goal.

• Discusses the timing for startups to seek venture funding.
• Highlights the necessity of aligning with investor expectations and understanding market signals.
• Suggests that funding should not be seen as a one-time event but as an ongoing dialogue with potential investors.

I think that really comes down to the type of business you're pursuing and what signals you agree on with your investors are the right ones to indicate you're ready.

This quote explains that the decision to raise venture funding should be based on the specific business type and mutually agreed-upon success indicators with investors.

• Recommends using venture capitalists as a resource for gauging business progress.
• Stresses the importance of continuous communication with VCs to understand market conditions and signals.

Looking at it purely as a process and not using the investors that are currently in the room and those out there as people who can help be a barometer for where you're tracking.

The speaker suggests that startups often mistakenly view fundraising as a mere process rather than an opportunity to leverage investor insights to assess business performance.

• Argues that marketing is difficult to manage in a distributed team due to the challenge of maintaining brand consistency.
• Emphasizes the importance of face-to-face interaction to build relationships with remote workers.

I think marketing is really challenging to work in a distributed model.

This quote points out the specific difficulties of managing marketing efforts within distributed teams, particularly concerning brand and product alignment.

• Believes that market dynamics will determine the appropriateness of adjusted compensation for remote teams.

I think it's right. And market dynamics will inevitably prevail, whether that changes up or down.

The speaker expresses the opinion that compensation for remote teams should be determined by market forces, implying a flexible approach to compensation based on location and market conditions.

• Debunks the myth that virtual communication alone is sufficient for building strong relationships in remote teams.
• Advocates for the necessity of physical presence to establish a foundation for digital communication.

The biggest myth, I think, is that although we have all this communication technology, that virtual communication is sufficient to build relationships with remote workers and face to face, I think still matters so much.

This quote challenges the assumption that technology can fully replace in-person interactions, emphasizing the enduring value of face-to-face contact in building team relationships.

• Shares a personal anecdote about considering a career in law and receiving advice from his father.
• The advice received led to a shift towards a business career.

Be the one that hires the lawyer, don't be the lawyer.

The speaker recounts a pivotal moment when advice from his father prompted a reevaluation of his career path, steering him away from law and towards business.

• Stresses the significance of long-term mentorship relationships.
• Compares finding a mentor to choosing a general doctor.
• Advocates for personalized guidance from mentors who understand individual goals and thinking patterns.

Kind of like finding and sticking with a great general doctor.

The analogy illustrates the speaker's belief in the importance of developing a lasting relationship with a mentor who can provide tailored advice over time.

• Expresses excitement for Terminal's future expansion to new regions and markets.
• Envisions Terminal becoming a global brand that will be integral to scaling new companies and providing professional opportunities worldwide.

In five years I see terminal being a global brand that's foundational for how the next wave of great companies will scale.

This quote reveals the speaker's ambitious vision for Terminal's growth and its potential impact on the global business landscape.

• Expresses gratitude for the experience of working with the team at Atomic and the excitement for the future of both Atomic and Terminal.

Every single touch point I've had with the team members at Atomic, from Chester to Jack to Andrew to you, it's just been exceptional.

The speaker conveys appreciation for the collaboration and shared vision within the Atomic team, highlighting positive interactions and a strong team dynamic.