I was recently discussing the value of metrics in an early stage organization like Factorial, where I found myself defending the value of metrics but it seemed that I was instead claiming that strategic business decisions were to be taken based on past numbers exclusively. Nothing further from my opinion.

My point regarding metrics is very simple: we’re emotionally self-centered animals and have a tendency to convince ourselves that our view is the right one. An approach to fixing this is being open-minded, which I would define as the ability to consider alternative views as possible, and trying to remove all personal bias from inclining towards a particular view.

A way to remove personal bias and ensure enough open-mindedness is by challenging one’s own view the same way the others are challenged and setting a rational and measurable objective to validate the truth in it. In the world of business, that means that either a strategic decision or a tactical initiative will be right or wrong if a certain goal is reached. A measurable and objective goal.

The universal metric a business uses to measure its progress is profit, but there’s an infinite stream of factors to it and lagging indicators: revenue growth, efficiency at serving customers, loyalty and satisfaction of customers, all the way down to something trivial such as visits at the website (as long as there’s a correlation between that and profits).

So, what does it mean, in my opinion, to be “metrics-informed” (a more explicit name than the infamous “metrics-driven”)?

Simply acknowledging the context where a decision is being made and objectively stating what the success of that decision looks like.

For a tactical initiative such as changing the color of a button this is trivial as it can be measured within a very short time frame: Increase conversion rate by at least 10%. Some decisions are more long-term and have a strategic nature, often based on a vision, a set of principles and a world that doesn’t necessarily exist yet, since it’s being built by the same decision. Such decisions will most definitely not be proven right or wrong within a few days or even weeks. It can take months – even years – until a measurable impact exists. But it will.

The somehow counter-intuitive part is that the past doesn’t determine the future. Nobody looks at the rearview mirror when driving a curvy road, the eyes must be pointing ahead.

This is especially true in a startup, where the future weeks often outweigh the past months or years. In a scenario of high growth, what’s been done is irrelevant compared to what needs to happen in the immediate future. That’s why the company vision, together with personal experience and intuition are the key ingredients for brave innovation and strategic thinking. Metrics exist to keep us honest and allow for objective retrospective and analysis.

As the lean startup mantra has it: Build, Measure and Learn.

If you have thoughts on this topic I’d love to hear them! Ping me on twitter @jordiromero. The original conversation was spurred by Bernat, Pau, and César.

Factorial raised a €2.800.000 Seed Round from three great investors, and I want to tell you how it went and everything we learned

Factorial is an HR Software for small and medium enterprises. By automating HR, employee benefits and payroll, companies can save a lot of time and focus on what matters: their people.

Before getting into the process of raising a round of investment for Factorial, I think it’s important to take a look at an important question: why raise?

We felt a “click”

Do you know those cases when you’re asking yourself “am I there yet?” and you don’t even know how to answer the question? That’s how we felt earlier this year. It had been one a half years since we started Factorial and it felt like we learned important lessons, and we had clear ideas on what we had to do next. But still, it was hard to know if we “were there.”

At that point, we had a company with its first customers, some early revenue but most importantly over a year of learnings around the problems of our customers, what worked and what didn’t, how to reach a growing number of companies with almost no marketing budget and many happy users. So far so good, but we wanted to know what came next.

Somewhere along the spring of 2018, we were struggling while developing payroll into Factorial. It’s a tough product to build, and we knew we couldn’t sacrifice the ease of use that granted us a very high customer satisfaction (and Net Promoter Score). It was at some point during the process of building product, talking to a lot of HR people and discussing endlessly with our team that we started making all the pieces of the puzzle fit. It turned out that we got to a point where the different parts of our product would feed each other and made the entire value proposition of Factorial an order of magnitude stronger.

Simply put: a time-off software that doesn’t feed your payroll system means e-mails and excel spreadsheets. A solution for employee benefits that’s all awesome in itself but requires your HR person to sync data back and forth with an external labor advisor solves a problem to create another one. And a payroll solution that requires half of the company to be asking the same questions over and over makes you wonder why you have all those systems anyway.

So it all clicked. A “sick leave would notify HR and re-calculate the pay slip for that employee. A new employee could configure her personal profile, configure her benefits and inform personal and tax details all at once, getting real-time feedback. The company would own all of their HR data and be able to make better decisions based on it. Ten times better. Click.

Plus, we were running out of money.

Let’s raise a seed round

The first thing was to revisit what we had and what we needed to keep growing. We asked ourselves some challenging questions such as:

• With what we know now: if we were to start over what would we do differently?
• If we had infinite money in the bank, what would we do with it?
• Why are we not growing faster?
• What’s our biggest opportunity?
• What’s our biggest distraction?

And so on. With that, Pau, Bernat, the rest of the team and I started working on a new plan and came up to the conclusion that we needed to raise a seed round of €1.5m. We also decided that it was time for institutional investors to come in, so far we had raised from business angels and family offices, but at that stage, a top-tier VC could help us in more ways. More on that later.

The process here gets a bit boring. It’s a numbers game, plus constantly iterating pitch and deck, upping your game and working on your psychology and confidence. And it’s hard. You go to the office and everything is on fire, growth often comes with pain. Go pitch a mediocre VC and get a no. That’s tough. I got mad quite often during that process. We talked to more than 50 funds, formally engaged with more than 25, got far with almost 10 of them and ended up right in front of the finish line with 5 investors. You won’t believe what happens next.

When it rains, it pours

I always heard this expression related to fundraising without fully realizing what it meant. Until now. I don’t know if VCs spy on each other, leak how their deals are going, or it’s just our confidence level projecting the fact that we’ve got good offers on the table. But in a matter of days everything went crazy, the 5 firms we were talking to started rushing to a term-sheet, and even new funds tried to meet, analyze and make an investment offer in less than a week. It had taken two months from the start — and three weeks to the fastest firm. We had to choose. And it was not hard.

Creandum approached us right in the middle of the whole fundraising process. Peter sent me a LinkedIn message and asked to do a video call. Right from the first moment I was surprised by how humble Peter and Creandum were– considering it’s the best VC in Europe, beating everyone else with their returns. Of course, having invested in Spotify (who just IPO’d) helps. Creandum focused right away on understanding the team, our motivations, and our vision.

It just happened that two days after talking to Peter we were flying to Paris for SaaStr Europa and Creandum’s General Partners would be attending as well. We met with one of their GP’s and had a long conversation around the future of HR over lunch that got us really excited. These guys think about the future, they don’t just try to detect patterns in our short history of CAC to LTV metrics. With no churn yet, LTV is technically infinite. Yet one investor turned us down because that ratio wasn’t good enough. Oh well.

So Peter brought in his partner Simon and together started working hard to understand our company, our product, the team we had assembled and all the metrics that were relevant. They flew to Barcelona after just a couple of days and by then we already knew we wanted Creandum to lead the round.

Creandum was one of the fastest investors to make a move, considering they entered in the middle of the process and got ahead of many with their offer. It just took some long discussions, late calls and negotiations until we reached an agreement. Creandum would be leading Factorial’s seed round.

After signing a term-sheet

During the fundraising process, we had kept discussing our plan and ambition, and ended up reconsidering our initial estimate to extend our runway while being able to grow faster. We increased the size of the round. So we still needed another investor to join Creandum and help us close the round. At that point, we had four investors who had been for working with us for weeks, plus three that got in just by the time we were signing the term-sheet from Creandum.

We knew right away who we wanted to join the round. We had been talking to K Fund since the beginning. We knew Pablo and Jaime for years now, and the references on Iñaki, Carina and the rest of the team were outstanding. K Fund is a smaller and newer fund, but we felt they have what it takes to be a great partner and we believe they will go very far.

Although our decision with K Fund was almost final, one of the late entrants moved so fast they left everyone else behind. Point Nine Capital is famous for being the most notorious SaaS VC, with their General Partner Christoph Janz being one of the most influential people in this industry (maybe next to Jason Lemkin and Tom Tunguz). We knew Rodrigo from Point Nine for a long time, and they knew us as well. They even invited Pau and me to their portfolio companies retreat in Berlin two years ago.

So with two great funds fighting to get in the deal, we did the only thing we could do: what would help Factorial the most. So we made a deal with both of them.

And that’s how we closed our €2.8M Seed round with Creandum, K Fund, and Point Nine Capital. The best performing fund in Europe, the number one in SaaS and the best VC in Spain. Thanks to all of them for joining us in our mad journey to change the world of HR.

There’s a small bubble in startups where we all consume each other’s products. SaaS startups tend to be extreme about it, using tens of other SaaS products to run the company. Factorial is no exception.

We started the company with a handful of essential tools and platforms to launch our first version of the product, and have progressively been adding products to the point where it’s hard to list them. Today we’ll take a quick look at the five tools we can’t live without, and leave a full list at the end.

1. Intercom

Sales, customer support, marketing and product

Intercom is a fantastic Swiss-army knife for a young startup. Everybody in our company has access to it, and we all use it for different purposes: sending on-boarding automated in-app messages, targeted e-mail campaigns, one-off announcements, customer support and product feedback.

Installing intercom takes seconds, especially if you do it using Segment.com as we did. The best part of Intercom is that you go very quickly from nothing to a performing drip campaign, direct customer contact and it even provides a very basic sort of CRM.

Here you can see one of our campaigns for Spanish admins via in-app message. Intercom even allows us to A/B Test our messages and compare their performance.

2. Chartio

Product and business

One of the things we have to do very often at Factorial is looking for answers:

• Are companies inviting their employees with our new import feature?
• How well do we retain users week after week?
• What’s our most profitable marketing channel?

Almost always we find that there’s no single place to find a good answer to these questions. Google Analytics, Salesforce, Intercom or our database might have parts of the answer, but that’s not enough, we need the complete picture. Not only that, we like to look at the answer rather than read it, so a fancy chart goes a long way when trying to understand patterns.

Pau and I were used to Chartio from our time at Redbooth, where we were also heavy users. Before setting up Chartio at Factorial, we tried a couple of their competitors, but we ended up with Chartio and are very happy with it. What we do with it is very simple:

• We connect all of our “data sources” to it (example: a MySQL database, a PostgreSQL warehouse, Google Analytics, manually uploaded CSVs with our marketing plan, etc.)
• We query those data sources using SQL and chart the results in different dashboards.

Here’s a silly example our marketing team is working on: they are “mining” some of our time off data to find correlations and craft some witty blog posts for the summer season:

3. Github

Development

Github is a fascinating case because it’s both the obvious choice to get started (with a side-project, a small consulting gig, or a brand new startup) and it’ll continue unchallenged until the company is thousands of employees and has billions in revenue. Github was probably the first thing ever that we set up to start hacking together the first version of Factorial.

We use it daily — hourly actually — to push new code, review each other’s improvements and centralize the different quality tools that we connect to it (such as CircleCI for continuous integration).

There’s really not much to say about Github since it does its job phenomenally well and no one else comes even close. The only alternative I can think of is going deep into the Atlassian world and using their well-integrated suite.

4. Salesforce

Sales

Now, this is a controversial one. I’ve been thinking about how we should track our sales activity and report on sales performance since we started the company. There are a lot of options in the market, but we knew that once we got to a certain point, we would have to move to Salesforce.

So the “obvious” choice to get started was implementing a simple CRM such as Pipedrive, HubspotCRM or close.io. That’s what most small startups seem to be doing nowadays (I socialized this topic a lot with other founders, CEOs and Sales Leaders and got a pretty consistent message). The challenge I saw with this was that implementing a CRM and integrating it is a big investment, not something you want to do for just 6–12 months.

We knew that as soon as we grew to a certain point, we would have to change to a CRM Operating System (aka Salesforce), thus re-implementing it, re-integrating it and migrating all our current data and sales activities.

So we went “all-in” and tried to get the most out of a vanilla Salesforce installation, using as much as we could only built-in objects and features, leaving hardcore customization until our business processes were mature enough.

We’re still in the process of getting the most out of it, so I’ll dedicate an entire blog post to how Salesforce can help an early stage startup :)

5. Slack + Redbooth

Productivity

All previous tools are about specific parts of our business, but we can’t get anything done if we don’t have a system of record for what needs to be done and a platform for quick asynchronous conversations.

We use Slack for following key notifications (from Github, Segment.com, etc.) and for quick and casual conversations. One thing that’s not ideal, and we’re fighting against are long discussions and misunderstandings.

Our rule is: Stand up and talk — I’m tempted to build a bot that posts this after two people go back-and-forth for 20 messages.

The other part is Redbooth, my favorite Project Management software, of course :) We have three major flows around Redbooth:

• Teams plan their weeks or months with a Kanban view and work hard moving tasks to the right ✅
• Teams have an “Inbox” where anybody in the company can request/suggest an initiative. Then the team will pick the ones that can get done without disrupting their priorities and leave the rest up for discussion next time planning sessions come up. 📥
• Everybody is in charge of their assigned tasks, making sure they get resolved promptly and collaborate when needed. 🤓

These two products coexist next to each other, and we have them integrated so that new or resolved tasks notify us via Slack. We also tried products like Trello, Asana, and Basecamp but our productivity is at its maximum with our current situation.

Bonus Points

All of the tools we’re using to run Factorial

Product

• Sketch
• Microsoft Flow
• Iconjar
• Framer
• Abstract App
• Marvel
• Figma
• Photoshop CC
• ScreenFlow
• Fonts.com

Engineering

• CircleCI
• AWS
• Ansible
• New Relic
• Sentry
• Mailgun
• POEditor
• Segment.com

Sales

• Dux Soup
• Clearbit
• Find that lead
• Aircall

Marketing

• Mailchimp
• Canva
• Ad Platforms (Google, Facebook, Linkedin)
• Buffer
• Semrush
• Hotjar
• DatoCMS
• Wordpress

Others

• Quipu
• Signaturit
• Typeform
• G Suite, formerly Google apps
• Office365
• LastPass

If you have any products you can’t live without or have an opinion to add on our product list, let me know below!

All the stories I shared in this blog so far came from some sort of success. This is not one of them.

I’m going to share how we went from zero sales to almost hiring our perfect VP of Sales, and where we ended up.

If you never read this blog or heard of Factorial before, I recommend you take a quick look at our beginnings and come back to keep reading.

So we’re at the stage where we found that our value proposition resonates very well with our audience, but we still need to discover our sales model and how we’ll generate enough revenue from our active user base and incoming leads to build the business we founded.

At the beginning, it’s normal that us, the founders, are doing all the sales, and it’s actually essential that we talk to leads and customers all the time to learn more about their pains, realities and ways of viewing the world.

But the truth is that some skills that can be good for a founder are also not so great for being a good sales person.

I’m a very curious person, and I love exploring in depth all the nuts and bolts of a customer’s business when I talk to them. I also like to think of all the things we can do to make their lives better and grow the value of our business. But that means that I tend to spend way too much time per customer and focus more on the future potential than being a systematic closer. Also, other parts of the business sometimes distract me from selling.

Let’s build a sales team

So we decided that it was time to start bringing in sales people who can:

• Systematically call leads
• Follow-up in an organized way
• Track their progress in a shared system of record
• Focus on the short term results
• Close, close, close and nothing else

Since we didn’t know yet how our ideal sales person looked like, we decided to go with a very broad definition and start narrowing down as we learned.

That’s not the most efficient way of recruiting a team, but that was the cost of learning what we needed during the process, and we prioritized learning.

To begin with, we listed three positions:

• An Inside Sales role, someone who would call our inbound leads and help them through the decision making process.
• A Sales Manager, who could do the previous role but also assume a manager role and build the team from within.
• A VP of Sales, somehow a unicorn that would also join the executive team and develop a sales playbook, think long term and contribute to our strategy.

To be clear, we didn’t want to hire all of them, but we would rather cast a wide net and see what kind of fish we would get.

During this process, two things happened:

• We learned a lot about the right profile for our sales positions.
• We accidentally caught a big fish.

The big fish

What happened is that the perfect candidate applied. He was a young executive at a handful of very successful startups in the San Francisco Bay Area. And he suddenly applied to our job position.

More relevant though, he was a sales executive, manager, director and even .VP of Sales at two massively successful companies, one of them very close to what we do here at Factorial. His knowledge and past experience alone would have been very impactful for us.

After a few Skype calls we started to seriously consider the opportunity and he flew to Barcelona to meet with us face to face. We spent two full days working together on a plan and got to the point where we all got very excited. Too excited. And that’s not good.

All the boxes were ticked: Incredibly relevant experience, great attitude, very good chemistry with the rest of the team, ambition, flexibility, eagerness to start over again, need for adventure. And the most important to me: I felt like I could trust him with a critical part of our company.

Our business model is quite special, and having someone who was leading a fast growth sales organization in a similar model was more than we could hope for.

After all this excitement we went right away to negotiating an agreement and extended him an offer. Yes, straight to closing the deal.

I hate to admit it, but after the heat of the moment, I absolutely felt the sweat starting to dry and the mood cooling down. The negotiation had been tiring, and I gave him a very short time frame to accept our offer.

The wait was painful. It included a whole week-end of doubts. Did we rush the decision? He would be a great VP of Sales, but…

Were we ready to hire a VP of Sales?

It turns out we didn’t spend that much time thinking about this. Over the weekend we went through multiple scenarios. Bringing him onboard would definitely allow us to step up our game and we would be able to build and grow a successful sales organization.

There were a couple of minor handicaps, but mostly we also felt like hiring him would be an investment towards scaling sales, and we were not at that stage yet. Of course it would have been a good investment long-term, but running a startup is often managing scarce resources and making trade-offs.

So, what happened?

Nothing.

I have to say I wasn’t ready to deal with this scenario. The weekend went by and the deadline for him accepting the offer passed. As we joked internally, we had the Schrödinger’s VP of Sales, in and out at the same time.

It turns out that he was having similar thoughts on his own, and reached a similar conclusion. We were asking him to relocate from the U.S. to Barcelona and take a high responsibility job in an early stage startup.

After a few e-mails, we agreed that it was a bit too early for both of us to make the move, and that we would have to keep the flirting going for a while before it was a better time.

I’m sure we’ll both wonder at some point…

What if?

So here we are, back to selling, selling, selling. I’m the first sales person, and the de facto sales leader. My goal is to establish the foundation and keep leading the team myself until it’s ready to scale.

By the way, we’re looking for hungry entrepreneurial minds to join our sales team. No matter your experience, age or background. Come with the right attitude and grow with us.

Who knows, maybe you’re our next VP of Sales?