Ready to make that next big hire? Here’s what we advise our portfolio companies to do (and not to do) in startup executive recruiting:

• DO understand the what and why of the role before focusing on who should fill it.

Running a startup is fluid and requires quick decision-making. But once you decide to make a change with an existing role or create a new one, it’s important to take time and care in creating structure around the role. As a practical exercise, be sure that you and your team can clearly articulate why you are making a change and what the new role will require. If hiring for an existing role, pinpoint issues with the previous situation to build out a new spec.

In terms of compensation and equity, seek out market data to see what other organizations can offer your ideal candidates. Call your peers to learn what they’re paying for similar roles. And if you’re looking to uplevel from the current person in the seat, expect compensation, title and equity to increase in turn. Despite the macroeconomic environment, the best executives are still commanding top dollar and have multiple opportunities in front of them. Offer within market range or you will lose out on the best talent.

• DO make your hiring process a top priority.

Timing is everything. The worst thing you can do is “test the waters,” putting feelers out to speak with candidates too early only to pause the search. Or worse, tell them you need to make another hire before you fill the role for which they’ve applied. Be deliberate and execute with conviction.

Follow up with talent candidates with urgency, pouncing and engaging as soon as possible. When actively recruiting — particularly for executives — the best hiring teams adjust their schedules to accommodate the candidate. It’s okay to prioritize candidates: ones sourced by your recruiter or referred in may be higher priority than ones who apply online, but running your process with urgency is best practice.

This all may seem like common sense, but we often hear about hiring teams taking weeks to get a candidate interview scheduled. It’s a competitive environment – don’t stand in your own way!

• DO establish a clear interview process.

First impressions are critical, especially with an increasingly savvy and discerning executive candidate pool. Also, as a startup, you and your team are already busy and want to be smart with your time. Therefore, it’s essential to lay out a clear and organized interview process as you move candidates through the funnel.

Start by creating an interview scorecard so you know who you’re assessing for: think in terms of objective skills and traits as opposed to just “feeling.” Determine who will be part of the interview loop and who can veto the hire versus who is there to assess and sell. If you have direct reports as part of the interview process, clearly communicate to them that their feedback and input is valued and will be taken into consideration.

After the recruiter has done the first screening interview, the hiring manager should take the next meeting, followed by the subsequent interviewers. You don’t want everyone to ask the same questions: determine themes or areas for each interviewer to explore with the candidate (past performance, current skill set, culture fit, situational questions, etc.) and assign to different interviewers in the process. The final meeting with a candidate should be in-person, ideally over dinner, to help with the close.

• DON’T lose sight of your organization’s design.

Be sure you’ve designed the role correctly. If you’re a company with $100M in ARR and looking for a CRO, but you’re telling candidates they will run only new business sales (not expansion), it’s likely you’re going to limit who will be interested. A great (and very honest) candidate might respond this way: “This role is titled chief revenue officer. New business is one part of the revenue team, but so is expansion, and so are renewals. That’s what I’ve done in the past and that’s my skill set. For my next role, I’m looking at moving forward, not backward.”

This concept applies across all functions – be sure you scope the role correctly for a company of your size/stage.  Build the organizational structure that maximizes company scaling, not around personalities.

• DON’T go dark during the interview process.

When engaging with executives, every touch point makes an impression. Regularly communicate with candidates during the interview process, clearly plan out who they are meeting and keep the process moving. Even if you’re cooling on a candidate or want to keep them in play while meeting others, keep the executive informed as to where they are in the process.

This also applies to candidates with whom you decide not to move forward. It is always best practice to let people know when you are going in a different direction and provide some feedback on why. This will leave executives with productive input and a positive impression of how they were respectfully treated. You don’t want your company to be thought of negatively in the market.

• DON’T forget to be real with the candidate (and with yourself).

We’ve heard candidates tell us: “The CEO says she only hires A talent, but the whole team around her are B players.” That may well be true, and it takes self-awareness to admit. If you have an earlier-stage team and are looking at upleveling that team, be candid about that. Communicating your plan—that you’re looking to make your first professional or “anchor” hire on the team—sends the signal that you recognize a transition is in order.

Bottom line: Be mindful that candidates are evaluating you and your company. They’ll research the reputation of the company, your other executives, and you. That reputation will impact your ability to hire A players so always be thoughtful of the type of leader and culture you’re creating.

• DON’T skip reference checks.

As executives progress in the interview process, take the time to conduct thorough reference checks. Remember that context is critical for each reference. How closely did this person work with the candidate? What was the nature of their working relationship? If the reference provides mixed or negative feedback, it’s best to validate this before simply writing a candidate off. You should seek additional points of view to determine if there is a pattern of behavior as opposed to just a one-off impression or incident from a single source.

When speaking to references, you want more than a simple “I’d hire them.” Get a holistic view on the candidate by speaking with former managers, peers and direct reports. Speaking with a candidate’s former manager is a necessity; if an executive can’t provide a former manager as a reference, that’s a big red flag. Learn their areas of strength in a past role, where they needed to grow/develop, skills they should hone and anything they’re simply not good at.

• DO break up, swiftly and cleanly, if it’s what needs to happen.

If you decide a candidate is not moving forward, a phone call is the method to break the news. Make sure you do the call yourself; don’t outsource it to a team member or your external search firm.

The tech community is well-connected. You may work with the candidate in the future, and that candidate will probably talk about their interview experience with others. Communicate professionally and in a timely manner regarding why you are not moving forward.

• DON’T lose momentum after the candidate has signed.

Even after your candidate has signed, you’ll want to stay connected and engaged. We’ve heard of candidates turning down other offers just to be wooed back to their current employer. The search for your executive isn’t over until they show up for their first day of work.

After you sign the paperwork, show your new executive love. Send them some company swag. Encourage the team members who were part of the interview process to send congratulatory notes. Ask your board members to do the same. Once you announce the hire internally, let the new hire know they’re welcome to meet people as they prepare to start. If local to their team, consider setting up a lunch or dinner to build rapport.

In conclusion…

Recruiting an executive means recognizing that everything in the interview process is information. You are showing this executive that you know what a considerate, thoughtful, efficient process looks like. As a hiring manager, you are putting your culture, your team dynamics and your awareness of the company’s mission and stage under a spotlight; it should make good sense to an outsider. Remember that the candidate is also evaluating you, and that a lack of consideration, even if unintentional, can tarnish your brand.

When done right, recruiting a top executive can yield you more than a great hire. It can help you better articulate your company’s vision, recognize the stage you’re in and where you need to go next, while finding the right leader to help you get there. Good luck!

The post What to Do (and Not to Do) in Startup Executive Recruiting appeared first on Battery Ventures.

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But you’re waking up at midnight in a panic, worried your business could fall apart. Why?

I’ve seen a version of this happen many times. When bootstrapped companies approach $10 million in ARR, many reach an inflection point. It’s the moment founders realize that what they’re building has the potential to be more than a modest family business. The business could scale—but the founder doesn’t know exactly how to do it. Some incremental growth—with the same team, tactics and technology—is possible, but the company could easily stall out, missing a huge opportunity for creating jobs and value.

Growth from $10 million in ARR onward requires significant changes in a company’s operations. How do you think about scaling up? Here are five ideas:

1. Professionalize your management team. I’ve seen many successful companies reach $10 million in ARR as family businesses, often with a core team of people the founder has known for a long time. At $10 million, the business likely has about 50 employees, and the founder knows everyone personally. The team that got you to this point was the right team for this phase—loyal, driven and scrappy, united by a clear vision about the product. But to scale beyond this point, you will need to professionalize your management team. That doesn’t mean replacing all your friends with Harvard MBAs or McKinsey alums. It does mean taking an honest look at your leadership team and making difficult calls: rotating some people out of their current roles, hiring outsiders with proven track records of scaling businesses, and upskilling current execs for the next phase.

Last year, my firm made an investment in a founder-owned, bootstrapped business generating about $12 million in ARR. In the first year of our partnership we helped recruit three new key executives: a chief customer experience officer, chief revenue officer and a VP of product management. All were brand-new positions. These hires, coupled with other moves to professionalize operations, helped accelerate organic growth and improve customer retention rates by the end of that first year.

2. Optimize your sales and customer success strategy. An experienced CRO or VP of sales might be your first formal hire. This person will help you think about sales efficiency, go-to-market opportunities and expanding your sales pipeline. Building a team—and the processes to take care of customers at scale—will require experienced leadership and investment in customer success. In the early stages, a bootstrapped company can run customer support ad-hoc and the CEO can support the biggest accounts. But scaling means preparing for a phase where you, as the founder, won’t have a personal relationship with every customer. Acquiring customers efficiently and keeping them happy is crucial; the long-term success and durability of your business likely hinges on it.

3. Formalize your internal systems and develop your KPIs. To scale your business, you need data and insights. You need to understand your customer retention and churn rates and how to improve them. You should know instantly how this year’s sales pipeline compares with last year’s. You need to understand your working capital and make sure you don’t run out of cash based on revenue and spend projections that aren’t back-of-the-envelope guesses. All this requires investment in internal systems. If you’re still running on QuickBooks, that’s not good enough. You’re going to need an ERP system, a solid CRM and real HR software. At the $12 million ARR company I mentioned earlier, we helped management implement six new internal systems in the first year, which touched on functions including accounting, customer support, sales and marketing.

4. Build out software infrastructure and security. If you’re successful, you will have many more customers; that will increase computing loads and demand more of your IT infrastructure. Many bootstrapped companies now run their operations in the cloud, such as with big cloud-computing providers like AWS, which are perceived as more scalable. But we find many companies haven’t optimized their code and systems. Security updates need to be handled with scale in mind as well; cloud systems are generally more secure than those handled on-premise, and a breach or significant downtime can ruin your business reputation and customer goodwill.

5. Think about expanding your product offering and entering new markets early. In my experience, many companies get to $10 million with one great, core product. In order to continue to grow at a good clip, they often must develop incremental revenue streams by releasing new products or move into new industry sectors, either organically or through acquisitions. A good way to get started here is to gather information through market research and speaking with customers directly to better understand their needs and gaps relative to solutions they’re currently using and what the competition is doing. That work will help you to determine where it makes sense to expand your product offering to address those needs. But many family businesses lack the capital, expertise and time to do this kind of market research, gather unbiased customer feedback, and then initiate a robust R&D process or pursue an acquisition, which is where an investor can help. Earlier this year, for example, my team helped a 30-year-old, founder-run SaaS company optimize its payments strategy by bringing payments functionality in-house. This allowed the company to capture additional margin and drive more growth and profitability.

Are there $50 million bootstrapped companies? Of course. But continuing to bootstrap means figuring out how to professionalize a business entirely on your own. Outside, founder-friendly investors can help founders work through these issues and think bigger about their company’s potential–and make that vision a reality.

This article originally appeared in Forbes.

The post It’s Hard to Get a Software Company to $10 Million in ARR. Scaling From There Doesn’t Get Easier. appeared first on Battery Ventures.

In light of these events, and the continuing macro-economic uncertainty, many finance teams are reevaluating their own treasury-management approach to make sure they’re managing their available cash optimally. On our recent Treasury Management Webinar, Battery General Partner Russ Fleischer moderated a discussion between Brian Kinion, CFO at Battery portfolio company MX* and Adam Danni, a senior treasury manager at portfolio company Collibra*, to share best practices in this rapidly changing financial environment. Here are some key takeaways from the session.

1. Don’t underestimate the importance of redundancy.

“Don’t keep all your eggs in one basket” is a well-known proverb for good reason. Businesses that stashed too much–or all–of their cash at SVB learned that lesson first-hand. SVB depositors with more than $250K in cash at the bank had zero guarantee that the Fed would make them whole (as it nevertheless decided to do two days after the bank’s collapse). If that hadn’t happened, many companies would have faced an unprecedented cash crisis and been unable to make payroll; many might have had to furlough employees or cease operations. (Some companies were compelled to keep large amounts of operating cash at SVB as a condition of venture-debt agreements.)

Interruptions in service can happen for a myriad of reasons, not all of which are as extreme as the SVB collapse. A multi-bank strategy is essential for mitigating risk exposure, especially to ensure that all your business’ essential cash needs can be met.

Consider not just partnering with multiple banks, but mixing the size of the banks you are working with, as well. The FDIC policy of insuring only up to $250K in deposits per account remains in effect.

2. Consider insured cash sweeps

Some banks can offer a service known as insured cash sweep, which can help diversify risk on the FDIC side. This service makes it possible to get FDIC insurance on balances above the standard $250K limit, all while retaining access to your money and earning interest.

Essentially, participating banks pay a fee to be able to access other banks in the FDIC network. A business can make a deposit above the standard FDIC maximum of $250K that is then divided into smaller amounts up to that limit and transferred to other ICS Network banks.

3. Don’t be afraid to reevaluate (and even renegotiate) your bank partnerships regularly.

Most business partnerships undergo a new RFP periodically to realign and ensure the relationship is still mutually beneficial. Brian Kinion suggests the same should be done for your core banking relationships.

Consider doing this annually: Things can change pretty drastically year-to-year. Evaluate the fees you’re paying. Are you still getting the right rates? Are there ways you could gain more operating leverage? Does the bank have the right technology to keep pace with your growth?

Your banking relationships are mission critical; you should make them the absolute best they can be.

4. Set up automatic sweeps to take full advantage of today’s interest rate environment.

When it comes to excess cash management, the goal is clear: maximize interest return. In today’s rising interest-rate environment, consider investing as much cash as possible.

One way to set your business up for success is by implementing automatic sweeps from operating accounts to interest-earning deposit accounts. This is one tactic that Danni implemented at Collibra. He explains, “there was a minimum balance required in the operating account, and anything that came in over that would automatically sweep into an interest-bearing deposit account. If we made payments out of that operating account that exceeded, say, the minimum balance, it would automatically sweep back into the operating account.”

This automation can be especially helpful for smaller teams where there may not be bandwidth to manage this process day-to-day.

5. Establish board-approved investment policies and foster transparency and open communication with the board around investments.

Let’s face it: In today’s environment, nearly every company’s board likely has more than a few questions about cash policies. Following agreed-upon investment policies and maintaining open communication about investing activities is crucial.

Aim to break things out in as much detail as possible in the policy. Include not only your investing plan, but also your risk-mitigation strategies. At each board meeting, take some time to share updates. What have you achieved? What setbacks have you faced? How are you handling those setbacks?

6. Maintain a 360 view of liquidity reporting.

Different stakeholders require varying levels of detail for liquidity reporting, but it’s all important. Make sure you are set up to see daily cash flow to inform forecasting, which will help you understand your short-term liquidity needs as well as where you can invest longer-term, or move money to money markets to make it more sizable.

Your CFO should have a dashboard with daily cash balances showing variance day over day, week over week, and month over month. If there are any large variances, make sure to identify the root cause and make it clear to informed parties.

7. Stay connected to your network, even when the waters are calm

In the chaos of the fast-moving SVB situation, Kinion recalls: “I was literally tethered to my desk, not sleeping, but staying in contact with all my CFO friends.” His network was able to share information amongst themselves about how to get ahold of certain people or access different accounts.

Even in the absence of chaos, there’s always value in learning from colleagues, especially those whose companies are at varying stages of operational maturity.

Treasury management might not be the sexiest topic, but it’s certainly a timely one – and not an area any company can afford to see go sideways. Advance planning can help your team mitigate risk, maximize cash returns and access, and avoid cash crunches while stretching your runway.

The post The SVB Dust is Settling: How Should Your Treasury Management Evolve? appeared first on Battery Ventures.