First Class Objects

A few months ago I shared some thoughts on the idea of “building a company” rather than running one. Building is a term a lot of people use, but what does it actually mean? 

It seems obvious to say, but building is an active process. You visualize your company as a purpose-built structure of assets and abilities designed to have a better than average chance of winning an outcome - and then you execute on that vision. It is the opposite of running around and patching holes everytime you spring a leak (though you kind of always wind up doing some of that too).

I like to think of the things you build a company with (the foundational blocks) as the First-Class Objects of your business. The main investments viewed through the most pragmatic lens possible. As a leader, these are the things you talk about with your team constantly and relentlessly. Without concrete first-class objects , your business is not durable and your successes along the way will likely prove to be short lived.  

The first-class objects people talk about all the time are things like: product, people, culture, customer service etc. I wanted to share some of the ones that, in my view,  people don’t talk about enough:

·      Customer base - Dominating a coherent and complementary customer base can deliver better revenue and lift your business into sustainable value. The more you focus on the right customers (size, vertical, geo etc.) for your business, the more sales efficiency cab increase.  

·      Brand – The market position, your value prop, your ideal audience, your ability to be credible.

·      Service Proficiency - I think fewer companies will be in a position to operate sustainably as pure-play SaaS operations. For a host of reasons, customers will demand professional services and success programs along with the technology products they purchase from vendors. And those services may need to match or even exceed the quality of the SaaS offering. Building the human engine to do this and making it a core proficiency (and not a loss leader) is a first-class object. 

·      Recruiting - Being the best place to work for the people you need the most. Having a pipeline of  people you can’t wait to hire and who can’t wait to come work for you. 

·      Finance - Most of the time, I really mean a leverageable balance sheet. Access to cash, access to debt and the ability to use these at the right cost and risk level to the company. It means you can make choices when others can’t. Even in the worst of times, some companies are grabbing market share while others are fighting for their lives; balance sheet has a lot to do with that.

·      Moat - Is moat a first-class object or simply the result of doing things right? The test ultimately comes out in the either your CAC or your LTV - or both.  And (to my mind) your moat needs to get deeper and wider every day, with every use of your product, with every new customer. It is a part of the economic engine of the company. This is why capital as a moat is sometimes short lived, same can be true tech or knowledge.