Why Initialized Invested In WorkRamp & The Future of Employee Training

Work is changing a lot, and great software remains at the heart of that. Around the Initialized offices, we often talk about how easy it is for someone to share a photo with a friend with great consumer software, but nearly impossible for very simple things to happen at work. 

Today, we’re announcing that we’ve invested in WorkRamp, a graduate of the most recent Y Combinator batch, that is re-imagining how companies train their workers.

Imagine for a moment: A room full of 100 people looking at PowerPoint slides together. The dull videoconference where half the people have the browser minimized. The long-winded email that managers spend days agonizing over, but most folks skimmed briefly and archived immediately. Incredibly, the best option for folks who wanted to train their organizations was to use MailChimp to send the email and check the open rates! 

Enter WorkRamp. The company has built a knowledge management tool that lets employers easily create training guides. These are living documents that are actively pushed to large teams, with sections that train people through tasks, tests and videos. These guides can be revised over time into a master plan that folks use for new employee onboarding, rolling out a new sales plan, or even for engineering teams to share the best security practices. 

Managers can get real feedback about whether the guides are useful, and if their teams actually retain the knowledge presented. For instance, a salesperson can shadow calls with senior sales people and get certified in their skill pitching people, using video, all inside of WorkRamp. Once a whole team has been through the training, the VP of Sales can easily see who’s up to speed and who might need some extra coaching. 

We love that WorkRamp guides are the obvious replacement for the dumb out-of-date wiki, a painful all-hands, and the boring videoconference. Their smart learning management software is already helping companies like Square empower more small business owners, and Off Grid Electric bring electricity to more homes in Africa. 

WorkRamp’s CEO Ted Blosser previously led teams at Box and Cisco, and his cofounder Arshdeep Mand was Director of Engineering at YC-funded SpoonRocket. It’s a winning combination: product/engineering founders who can sell. Here’s what Ted had to say about starting WorkRamp now with more experience:

My first company failed and I promised myself that I would go learn from the best before taking another shot at starting my next one. I spent almost 5 years at Box, learning and doing everything I could — from sales, to product management and go-to-market. I was able to work with top leaders like Aaron Levie and see first-hand what you needed to do to make your company successful. Right before my fifth anniversary, I felt the market opportunity was right and my skill set was developed enough to make the leap again. Building a company is a long journey (especially in enterprise SaaS), but there hasn’t been a day so far where I’ve regretted the timing of my decision!

We’re very excited to be investors in this startup with great co-investors and friends like Leo Polovets at Susa Ventures, Semil Shah at Haystack, Wei Guo at Wei Fund, Mike Ma and Mike Miller at Liquid 2, and super-angel Elad Gil. 

WorkRamp is available now at workramp.com.

Flexport CEO: The corporation is a relic of a bygone military era


Ryan Petersen founded Flexport, a shipping logistics company that manages and tracks inventory as it crosses the globe by ship, plane, truck and warehouse. They recently closed a $65 million round after taking seed investment with Initialized back in early 2014.

The genesis of the company is rooted in Petersen’s teenage years, when he was buying and selling products from mainland China by arbitraging costs between marketplaces like Alibaba and other U.S. sites. His second company, ImportGenius, played off the first one, when he and his brother realized that all manifests for ocean freight shipments entering the U.S. were a matter of public record. He started digitizing these documents — around 300 million so far, made them searchable and began selling subscriptions to that data.

But when Petersen started Flexport, he didn’t want to just re-think shipping. He wanted to take a wholly different approach to structuring a company.

Companies as Biological Organisms

While in business school, Petersen wrote an essay, called “Out of Control By Design.” 

His idea was that corporations, as we know them today, are a relic of a bygone military era. They have teams that are siloed and split by function, which centralizes decision-making power and makes companies less nimble and responsive to customer needs. 

But as the nature of warfare and security threats changed, the military adapted. They’ve created special forces and squads that flexibly operate where traditional top-down control structures once dominated. Companies haven’t.

Petersen argues that the militaristic approach of the past has to be replaced by a more accurate metaphor. Businesses, made of people, behave much more like biological systems. 

“We want our company to behave like an immune system, where people see a problem and kill it rather than waiting for permission,” he told me.

Making Customer Service Central, Rather Than Peripheral

And so, rather than having siloed teams in sales, customer service and operations, Petersen and his onetime business school classmate, COO Sanne Manders, structured an organization where small teams or “squads” of account executives, account managers, operations associates and customs compliance specialists work together to address client needs on the fly. It’s totally different from how customer service is usually a more peripheral function inside tech companies.

“Companies often treat customer service as something that can be like a coin-op. They don’t empower reps to solve problems,” Petersen said. “But employees would rather be much more than a cog in the machine. You want bottom up decision-making, not top-down control.”

Every Flexport customer has a lifetime relationship with just one team or squad. And every customer service rep has autonomy within the squad to make on-the-spot decisions to make customers happy without needing to go up a hierarchical chain of approval or following a rigid protocol.

“When I reflect on bad customer experiences I’ve had with companies, it’s always because the person I was talking was not empowered to do the right thing to help solve my problem,” Petersen said.

In Flexport’s case, a customer can have an extraordinarily valuable lifecycle. Earlier on in his career, Petersen learned that the yoga brand Lululemon has used the same freight forwarder from when they were doing only $1.5 million in revenue. Today, Lululemon does more than $2 billion in revenue. 

While Lululemon isn’t a Flexport customer, this realization ended up informing Petersen’s strategy. The goal is to lock in valuable companies as customers when they’re young and to grow up with them. Petersen estimates that Flexport’s clients could spend up to 5 percent of their revenue on freight.

Tracking Your Net Promoter Score

To make sure his customers are happy, Petersen measures Flexport’s net promoter score or NPS daily on Delighted. The net promoter score measures how many customers would refer a friend, colleague or client to the business. Flexport’s current score is 79, which would put the company among brands such as Starbucks and Apple. 

“In the old world, the executive committee or a CEO was in charge. In our world, the customer tells people what to do,” Petersen said.

HR Incentives and Unintended Effects on Hiring Engineers

When Harj Taggar founded Triplebyte a year and a half ago, he wanted to take lessons from evaluating thousands of startups as a former Y Combinator and Initialized Capital partner into helping companies put together the very best technical teams -- regardless of background or pedigree. 

He started Triplebyte, a company that does the first pass of evaluating engineers through programming tests and interviews. Since starting last year, Triplebyte has evaluated 12,000 candidates. Of those, Triplebyte has interviewed 2,000 engineers and sent 15 percent through to the final step of being introduced to companies in their network. At partner companies like Dropbox, Cruise and Stripe, Triplebyte is seeing offer rates on candidates that are above 60 percent. (You can read the company's post about it here.)

As part of the Initialized portfolio, he shared a few observations he's made over the years at how growth-stage technology companies build engineering teams, and where they can miss the mark in creating incentives for recruiters.  

“The metrics of success you give your recruiters or your recruiting team can have unintended consequences that can harm diversity efforts,” Taggar said. 

Here are metrics that CEOs emphasize to recruiters that Taggar thinks can sometimes have unintended effects:

  • The on-site offer rate: This is percentage of candidates who come to on-site interviews who you ultimately end up approving and offering positions to. Taggar says some CEOs tell their recruiters to optimize for this. But the problem is if you’re trying to maximize on-site offers, recruiters will end up becoming more conservative. They’ll go for safe, recognized engineering schools rather than lesser-known ones that may produce a more diverse engineering team, but a lower on-site offer rate. “Recruiters will dig in, and start making sure they’ve only gone to certain schools, which reinforces their pattern-matching and could hurt diversity efforts,” he said.

  • The offer acceptance rate: This is the percentage of offers that are being accepted. Because you’re putting recruiters on the hook for closing candidates, they’ll get penalized or feel bad if few people or no one accepts the company's offers. When CEOs emphasize this metric, Taggar says recruiters will start advocating for avoiding making offers to candidates that they think won’t accept deals, which means a company could miss out on good potential hires. 

  • The “culture fit” rationale is probably overrated: When Taggar started Triplebyte, the company made the deliberate decision to only screen for technical skill rather than soft skills or “culture fit” on top of that. Even with this decision, the company still has a 60 to 70 percent placement rate for the candidates it forwards to startups. “For engineering hires, this suggests that the bottleneck isn’t “culture fit,” it’s just getting people who have the skills.”

Here are metrics or practices Taggar thinks CEOs should optimize for:

  • Minimizing response time to candidates: “From a procedural perspective, the best engineering organizations never seem to leave a candidate waiting for more than 24 hours,” he said. “Usually, founders have no visibility into this.” Taggar said if he were starting another company, he’d try and monitor response times to candidates through Lever (another Initialized-backed startup) or e-mail. “I’d monitor how long it takes my recruiting team to get back to candidates and relentlessly optimize that,” he said.

  • Keeping the hiring process centralized as long as possible: Early on, it’s very easy for startups to have a centralized decision-making process where founders and early team members can have input on every new hire. But this obviously becomes more difficult as a company grows. “When you don’t centralize your process, it’s hard to maintain consistency. If you don’t have consistency, you will be more likely to miss out on good people,” he said. Taggar said Coinbase and Mixpanel still have centralized processes where a single-person has input in end-decisions on hiring. 

  • Emphasizing the match between candidates and technical projects they’re interested in over selling the grand vision of the company: Taggar says the best engineering organizations pay a lot of attention to matching the personal interests that every candidate has with what they end up working on inside a company. “It’s less about selling the big vision of the company and more about being really specific and getting people to work on something they’re really excited about.”

  • The false negative rate: Taggar says growth-stage CEOs could start measuring the percentage of candidates that they reject that go on to get offers at companies whose hiring processes they respect. “This is somewhat tricky to do,” he said. “You can check LinkedIn profiles of candidates, and look for companies they end up getting jobs at and try to get the rate of misses down over time. I think companies just completely overlook this.”

Last minute tips for YC Interviewees

This is the first week of interviews for the Y Combinator Winter 2017 batch! So I thought it'd be helpful to folks to get down in writing my lessons from being a partner doing interviews at YC for almost 5 years. 

Congrats on getting the interview. You've made it past the most significant cutoff in the YC applicant process. Based on your team, idea, and traction, you've made it into the top 5% of all people starting startups at this time. You're one 10 minute interview away from being in the top 1.5%. 

Here's the list. You'll notice that each of these is usually addressable through practice, and preparation. When you pitch an investor for half an hour or an hour, you have a margin of error. With 10 minutes, you don't. 

Use plain-spoken language and start concrete

You don't have a lot of time to explain what you do. Ten minutes is not a lot of time. Don't let your desire to fit some idea of what a startup should sound like obscure what you actually do. If you're making  software that connects retailers with consumers, that's fine, but that's not specific enough. Better to say that you help brands like Gap or Aeropostale directly sell to customers online through YouTube stars. 

...Then zoom out, and be sure to show why that could be something much bigger

The best founders are able to start off with very concrete and real progress, but then once they've established themselves as real, they can zoom out to show what the product could become. So you might be helping Gap sell through YouTube now, but because Gap is such a great lighthouse customer, it means that the Fortune 1000 is now willing to sell direct through you as well, and that could be very big. 

Traction gets you in the door, the big future gets you the check

Smart investors never fund things because of what you've done so far. What you've done just gets you in the door. What makes people get out the checkbook is how big you can become. 

This fact is important because the top broken pitch problems end up being related to exactly this. Some pitches start with the grandiose future, but the team has nothing rooted in reality or what they've done so far to show that they're the folks to make it happen. Others focus almost entirely on talking about the traction now, but never talk about what it could become. 

It takes both. 

Know your numbers

What is the cost of what you're doing? How much does it cost to acquire a user? How much does it cost to service one customer? How much money do you make per unit sold? It's fine if you're not profitable initially, as long as you have some story where you can certainly be profitable down the road. 

The most obvious way to tell if someone is serious is that they've thought through the costs and pricing of their business. Great founders never neglect that part, because at the end of the day, the bottom line is how you tell if a business is good, or a business at all. 

What do you understand that nobody else does? 

Having big dumb competitors is good because it shows that there's a real market or problem that's being solved, and YC partners have a long history of seeing firsthand small teams of smart people outperforming big dumb companies for years. It's a well known playbook. But it's not enough to call them big and dumb. What can you do that those incumbents can't or won't? 

If you don't have competitors, that's OK too. What do you replace? What were people doing before using your product or service? One thing this question tends to capture is whether people actually want it. 

The tricky part is when there are actually smart competitors who already exist. Then you've got to be even more direct about why you are better. These are cases where in particular you have to be 10X better, not just 10% better. The road to startups is littered with many failed teams that have a product that is only marginally better. 

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These tips work great for all pitches (including pitches to us!). Being prepared in the above ways is helpful for founders in the same way the 12 question YC application helps founders of all stages— because these are the things that naturally help people make things people want.

YC remains the best place in the world for eminent founders to create new things and join one of the most valuable founder communities, and we've been lucky to have a front row seat to the great things that have come through. Let us know how we can help.

Best of luck to all the interviewees. 

Initializing Initialized Capital...

Welcome to Initialized Capital. We’re proud to announce we're investing out of a new $115M early stage seed VC fund. 

We’re founders who are engineers, designers, and product people. We’ve built startups from scratch ourselves, and we want to help you do the same. When startups work, they look like miracles, but they are in fact the result of impeccable execution in every aspect, from the team, to the idea, and ultimately to the product itself. There are a thousand landmines that every founder, no matter the experience level, has to navigate. If we can help point out those landmines, and help folks along their journey, then more miracles can happen.

We invest in early stage companies with a typical check size of $500K to $1M. This should either be plenty of funding for a small team to show traction from nothing, or the start of a strong seed round syndicate with other smart investors we know who can help in complementary ways. We’re happy to be the first check into your seed round and we won’t ask you that thing everyone else always asks: "Who else is investing?" We make up our own minds. 

We believe great companies emerge from many industries and disciplines, and from anywhere in the world. We are best at funding small teams just starting out, when they have zero to 10 employees. You should have a great team pointed at a great idea, but we’re not afraid to invest even if you only have an early demo.

Come talk to us. We’ve done more office hours with more startup founders than most anyone you’ll find. If we can help you avoid some landmines and find the right path, then that’s what we’re here for.

—Garry Tan
Cofounder and Managing Partner