Ionic Partners, a pioneer in investing in and operating Second Chasm software companies, announces the appointment of John Jonson as Principal, Capital Formation.
March 8, 2023 – Ionic Partners (“Ionic”) announced today that John Jonson has joined the firm to lead Ionic’s capital formation efforts, bringing his decades of experience as a leader in fundraising, investment entity structuring, and business development.
“We created Ionic to bring to bear world class software and technology expertise to an untapped part of the market. As we are now poised to apply our team’s experience and skills to a targeted and significant opportunity set, we are thrilled to have someone of John’s extensive background and deep relationships on board to help enable this inflection point,” said Donald Park, Co-Founder & President of Ionic Partners. He added, “John has a proven track record of translating unique manager strategies across various industries for major institutions and family offices. As we expand our offering to investors across both the equity and credit spectrum, John will be an essential addition to our team.”
“Translating top tier investment strategies to all types of investors has been a gratifying experience during my career. Having been an allocator for family offices as well as a university endowment, I understand and enjoy the substantial process in finding optimal fits,” said Jonson.
He added “Donald and Andy have created at Ionic an exceptional team at an opportune time. With experienced, discerning, and steady hands on the wheel, they and their team have become one of the most stellar emerging software managers in one of the most attractive investment spaces for the coming decade. The combination of finding the right companies along with Ionic’s specialized focus and expertise is a unique and highly appealing value proposition to many, and I’m incredibly excited to join and contribute.”
Jonson joins Ionic as its third Principal, joining Audrey Pang and Tanner Cerand who joined the firm from Vista Equity Partners and focus on Operations and Origination, respectively. Prior to joining Ionic, John served as Head of Capital Formation at Pantera Capital, the first blockchain hedge and venture fund in the United States and considered one of the pre-eminent firms in the space. While at Pantera, John led the successful raise of the $1.3B Blockchain Fund. Prior to that, John was a Managing Director at Lyrical Partners from 2013 to 2020, where he led the single and multi-family office, university endowment and institutional capital formation efforts, and also helped source, diligence and manage the firm’s venture investments. Before Lyrical, John was a co-founding Managing Principal of Capricorn Investment Group, originally the single-family office for Jeff Skoll, the first president of eBay. John served as Capricorn’s Chief Operating Officer and led Strategic Business Development for Capricorn and its affiliates. During his tenure, the firm was an early investor in Tesla, VitaminWater, SpaceX, TrueCar, HeartFlow, and Yammer.
John received a BA in Public Policy from Duke University and an MBA with high honors from the International Business Program at the Moore School at the University of South Carolina, with a focus on Japanese finance. He has served on the University Endowment’s Investment Oversight Committee since 2009.
About Ionic Partners
Ionic Partners brings together over 50 years of global software industry expertise as both operators and investors. The company is led by Andy Tryba and Donald Park, formerly of ESW Capital and Vista Equity Partners, respectively. Ionic has experience investing in businesses as entrepreneurs from startup to growth stage, to IPO and Fortune 500-scale. They have also been advisers and partners to management teams and boards. Ionic acquires recurring revenue software businesses and creates value through a proven operating model, a dedicated team of software operators and executives, and change management experts with deep experience in building world-class culture, processes, and successful outcomes.
Ionic Partners, experts in acquiring and operating recurring revenue software businesses, announces the appointment of Tanner Cerand as Principal, Origination.
January 11, 2022 – Ionic Partners (“Ionic”) announced today that Tanner Cerand will join the firm to lead Ionic’s sourcing efforts, bringing to bear his decades of experience as a leader in investment research, origination, and business development.
With an established and permanent capital base, Ionic is a highly active acquirer of recurring revenue enterprise software businesses. Ionic Partners is distinguished by its focus on acquiring and operating “Second Chasm” software companies – those that have strong products and teams, but whose revenue growth and profitability don’t reflect the intrinsic value of their offerings. These companies are characterized by lower revenue growth and sometimes near break-even profitability, which causes investors and operators to recognize that they need a new operating approach to successfully scale.
“In a market awash in capital and outsized returns, many companies today believe they must exhibit hyper-growth characteristics to be successful. We don’t believe that at all. Many companies have great products and great teams but struggle to access the best resources in the world to remain competitive,” said Donald Park, Co-Founder & President of Ionic Partners. “Ionic was created to find companies where leadership recognizes these challenges and seeks a fundamentally different way of operating to succeed in the new world. Tanner Cerand has a proven history of identifying great companies with strong products and attributes that others may overlook, and he’ll be a great addition to our team.”
Cerand added, “Second Chasm companies typically find themselves in a marginalized position in the marketplace. They tend to be too small to garner the attention of traditional acquirers and growing too slowly to attract traditional investors in a ‘growth-first’ economy. Where others may overlook these companies, Ionic sees tremendous undiscovered value potential. This combination of finding the right companies along with the Ionic team’s specialized focus and expertise at running and growing these companies is a unique and exciting value proposition that I’m thrilled to be a part of.”
Ionic Partners builds sets of enterprise software companies through acquisition, focusing on $3mm to $30mm revenue businesses globally. Ionic specializes in transactions that require unparalleled speed and certainty – from corporate carve-outs and ‘end of life’ venture investments, to entrepreneur-led businesses and family-held operations. Ionic brings over 50 years of experience as software entrepreneurs, operators, and investors and is led by Andy Tryba and Donald Park, formerly of ESW Capital and Vista Equity Partners, respectively. As part of their unique operating methodology, Ionic acquires businesses and transforms them into modern companies with a cloud-first approach towards product, workflow, and especially, talent. Ionic’s recent acquisition of Gigster, from investors Andreessen Horowitz and Redpoint Ventures, has accelerated their ability to provide enterprises with the ability to quickly develop world-class software products and digital assets using an elastic, globally-connected workforce.
“The modern cloud presents opportunities to deliver high-skill jobs to the right person, instead of the person to the job, which is how most businesses operate,” said Andy Tryba, Co-Founder and Chief Executive Officer, Ionic Partners. “We help bring companies with stalled growth or operational challenges into the modern cloud using our expertise in building and managing remote teams,” said Andy Tryba. “Tanner’s deep industry relationships and established track record at some of the world’s best software investment firms will help bring the right kind of companies into our unique model of value creation through innovation.”
Cerand brings 18 years of financial market experience and nine years of experience in software and technology deal sourcing. Cerand previously led deal sourcing at Build Acquisition Corp. and BuildGroup, an operator-led permanent capital software investment group led by Lanham Napier, the former CEO of Rackspace (NASDAQ: RXT). Prior to BuildGroup, Tanner helped build and lead research and business development strategies at Vista Equity Partners, a leading software investment firm with over $86 billion in AUM. Tanner’s work on the Founding Committee for BEAM Angel Network helps provide equitable access to capital for women-founded companies and generational wealth for the founders and investors that support them.
“I love engaging with executives and investors to have thoughtful conversations around key technology trends and where markets are headed, while building meaningful connections between founders, executives, and investors across my expansive network,” said Cerand.
About Ionic Partners
Ionic Partners brings together over 50 years of global software industry expertise as both operators and investors. The leadership team has experience investing in businesses as entrepreneurs from startup to growth stage, to IPO and Fortune 500-scale. They have also been advisers and partners to management teams and boards. Ionic acquires recurring revenue software businesses – specializing in carve-outs and Second Chasm companies – and creates value through a proven operating model, a dedicated team of software operators and executives, and change management experts with deep experience in building world-class culture, processes, and successful outcomes.
The term ‘asynchronous’ is confusing. And when you add in the word ‘work’ – eyes glaze over.
In many ways – ‘working async’ is jargon from the remote work world. But ironically, even when people are in the same city, it’s still best to work asynchronously.
What – why?
Asynchronous maximizes deep work
The goal of asynchronous isn’t to make ‘remote work’ better. The goal is to maximize efficiency and deep work.
Recently, a professor from Georgetown University named Cal Newport wrote a great book called Deep Work.
The key message of the book was simple but profound. To solve any cognitively difficult problem, you have to spend long stretches of uninterrupted time thinking about the problem. He outlined a ‘law of productivity’:
Law of Productivity = Time Spent x Intensity of Work
(Where work is defined as ‘uninterrupted work’ at full concentration)
Unfortunately – many of the typical synchronous work models don’t facilitate deep work. Individuals are constantly interrupted by meetings, brainstorm sessions that are hours long but only produce 5 mins of good work, constant IMs, constant emails, etc etc.
And as a result, the typical worker is not solving cognitively difficult problems – they are simply ‘busy’.
What is asynchronous work?
Dictionary.com defines asynchronous as ‘having each operation start only after the preceding operation is complete’.
With this definition – people commonly assume that team members are on their own islands and never meet or talk to eachother. This is definitely not the case.
How async really works is collaborative and parallel. The key, however, is that the team members work independently prior to engaging others. And this engagement is often through the work deliverable instead of a live meeting or discussion.
Often times – a team member will spend dedicated time (deep work) coming up with deep insights on a problem. They then capture those insights into a sharable deliverable that is handed off to other teammates to add their insights in parallel. This sequence enables all parties to contribute to the final product.
Collaboration still occurs – but team members contribute on their own time. Then, after everyone has contributed, a normal synchronous discussion may occur to finalize or make key decisions.
It’s as simple as that.
Here are 3 quick examples:
Example 1: Defining a product feature
Product owner spends 3 hours to write the detailed product spec on a Google Doc. The product owner then sends it out to rest of global team for feedback.
Everyone comments directly on document and the product owner incorporates the feedback. Then a meeting is held to make key decisions on the product spec and final version of document is sent out to all stakeholders.
Example 2: Metrics show decrease in sales win rate of quality leads
VP of Marketing spends 2 hours analyzing all of this quarter’s lost leads and SFDC notes. The VP of Marketing writes up a Deep Dive document with analysis, root cause and proposed fix. She posts the link in Confluence.
All of the SDRs/AEs review data and comment on their lost leads and rationale. They also comment on the suggested improvements and next steps to fix. The SVP of Sales & Marketing calls a 1 hour meeting with key Sales/Marketing execs to approve key decisions/changes. The VP of Marketing sends out final document and records 3 min video with key new actions.
Example 3: Communication of monthly goals by VP of Support to team
VP of Support writes monthly goals for the org into Confluence. The VP of Support records a 3 min video and posts onto the Microsoft Teams announcement channel. Support members read and comment in Teams.
What tools should I use to work async?
There are a lot of tools claiming that their software is the key to async work. Ignore them. You don’t need anything beyond what you likely already use today.
Mastering async is less about the tools and more about how you modify your internal processes to get work done.
The biggest internal process change is getting out of the mindset of ‘let’s have a meeting to discuss.’ Never do this. These unstructured meetings lack the deep work insights needed to make good decisions. Always require deep work prior to any meeting – much like Amazon’s 6 page paper format (LINK). You’ll be surprised at how many meetings are no longer needed when you have long-form written documents that can be commented on instead.
Below are some of ways we use common productivity tools to manage our async organization.
Knowledge management & goals: Confluence
Rationale: Organizations need to continually learn & improve. To do so – institutional knowledge must be captured in 1 location and continually iterated. We’ve tried using various Google Docs, Word Docs and others – but we found these get disorganized quickly and disappear as employees leave.
Instead, we use Confluence as our ‘brain’. We have a common data structure across every team to ensure we capture and disseminate the knowledge. Teams contribute to Confluence on a daily basis.
How to use for async: Confluence is our most important tool to collaborate asynchronously. All employees have read/write access but the input is structured and consistent. It includes the following:
Company Handbook – overall documentation of values, processes, horizontal trainings, etc
Playbooks – Company-wide & divisional playbooks that are continually iterated as we learn
Goals – Annual, quarterly, monthly and weekly goals by company/division/manager/individual. All goals are transparent and visible to all employees. Goals are reviewed by the manager/individual 2x a week via check-in-chats.
Note: Many companies use specific goal tracking software – but we use Confluence to ensure that data is in 1 spot. Some divisions may use their own task manager (JIRA, Monday.com, Zendesk) – but the annual/quarterly/monthly/weekly goals themselves are in Confluence.
Key insights & deep dives – key learnings from successes or failures – with appropriate long-form documentation on causes and fixes
Org charts & hiring pipelines – 1 location for all org charts, contact info, structure of teams, key roles & hiring pipeline content/tests associated
Onboarding & training – location for all onboarding & training information for both new hires & current team members
Metrics – visible ‘scoreboard’ for all team members & divisions based on lead metrics
Cloud productivity apps: Microsoft 365 or GSuite
Rationale: Both Microsoft 365 and GSuite are our cloud productivity apps to get work done. We largely don’t care which provider – as long as the documents themselves can be worked on by various employees asynchronously and are the cloud versions (no local versions emailed).
How to use for async: All employees write long form documents (specs, strategy docs, deep dives, RCA, etc), develop online spreadsheets, online versions of presentations, etc. These documents are the core of ‘deep work’ and the outputs are then shared with various team members for review/comments. We use comments heavily – and expect our employees to offer deep insights and feedback.
The transition to writing long-form docs is a key behavior change that managers need to drive down the organization. But it’s a powerful management tool that demonstrates the quality of the employee’s insights.
Additionally – all meetings must have a detailed document that has been shared to attendees prior to the synchronous discussion.
Important docs are then captured into Confluence.
Business Messaging: Microsoft Teams or Slack
Rationale: Both Microsoft Teams and Slack have similar functionality. We prefer Teams over Slack due to the integrated cloud storage folder structure & integrated Teams video service. But more important than the tool selection is the usage of chat and channel posts. We are very intentional about our use of these tools – as well as shutting them down during deep work time.
We rely more heavily on Channel posts than IM chats. Posts enable async feedback that is nested under the post and persistent. Chats are often ‘noisy’ and quickly disappear due to the volume (and only relevant to those currently online). But in all scenarios – both posts and chat are our primary form of day-to-day communication (not email – more detail below).
How to use for async:
Chat – usage should be minimized and used primarily in a 1:1 or 1:2 mode for quick questions. Due to the fact that chats do not maintain or spread knowledge well – these quick questions are intended to be day-to-day dialogue to run the business vs important insights. Any important insights should be transferred into Confluence. We also do not have the expectation that chats are immediate – since members of the team are working in various timezones.
Channel posts – posts within channels are a bit more persistent and should be used for most team communications. Team members comment under posts and provide feedback. We structure our channels within the companies and the divisions into the following:
General – this is the channel where most posts occur within the company/team
Announcements – this channel is for company-wide or team-wide announcements
Fun – this channel is for random fun facts, pictures or other cultural building posts
Recognition – this channel is to recognize peers/subordinates/others
Training – this channel is for links to training articles, key insights (that are also posted in Confluence), etc
Project specific – when necessary – we create project specific channels for selected audiences
Email: Outlook or GMail
Rationale: Similar to the Teams vs Slack debate – Microsoft email vs Gmail have similar functionality. We largely don’t care which tool is used – but we are very intentional about our use of email – and try to minimize as much as possible.
Email is a very poor medium of internal communication. Going through emails is time consuming, non-persistent in their knowledge capture and poorly structured for collaboration (reply-all is terrible). Insights from emails are rarely captured into a location that can be referenced and iterated on later. As a result – we discourage ANY internal emails. Emails are only to be used for external communication (customers/partners/etc).
How to use for async:
ONLY use email for external communication to customers/partners/others
Forwarding any external communication to internal audience (but discussion occurs in chat/channels/docs)
Recorded video: Loom, CleanShot, Microsoft Stream
Rationale: If there is 1 tool that you may not use today – it’s a cloud video recording/sharing app. Quick 2-3 mins videos are essential tools for async management. Though long form written documents provide more insight – quick recorded videos can accelerate understanding. Using a recording app like Loom, CleanShot or Microsoft Steam is a simple way to record and send. These videos must never be longer than 3 mins and the recording person should never take more than 2 tries. Here is a LINK with more information on how to record 3 min async videos.
How to use for async:
Check-in-chats for goals updates & blockers discussion
Misc project specific recordings to accelerate understanding
Fun culture videos if traveling to customer, etc.
Working & managing asynchronously is a skill and must be practiced. It’s easy to revert back to synchronous – believing that is faster/better. But it’s not. Synchronous simply adds low value ‘shallow busy work’ that makes things appear as if they are faster. Deep insights come from the entire organization mastering deep asynchronous work.
For more articles on how to manage asynchronously:
Congratulations. You’ve managed to (sorta) figure out this remote work thing. Your team is working from home, Zoom appears to be working and your company did not go down in flames.
But unfortunately – now you’re stuck in Zoom meeting hell. You’ve replaced your physical workspace for a non-stop video conference. Brutal.
It doesn’t have to be this way.
What is ‘asynchronous’ work?
You’ve seen the term before but largely ignored it. Why would you work differently – just because you’re not in the office?
Because of your Zoom hell – that’s why.
A key part of leveraging remote work is to enable folks to work on their own time. Their own schedules, their own locations, their own time zones. If you don’t do that – you force everyone to jump on unproductive Zooms together (and at odd times).
Instead – you need to adopt a culture where work can actually occur without you. Async.
The standard method to get to async is long-form written documents. These written documents serve as the base – then others add to it, comment, etc. This document then provides the framework that leads to a set of actions the team delivers.
Though the long-form document has its place in async – sometimes you need a richer medium. And if a picture is worth a thousand words – a video is worth a million.
With a quick video – you can better communicate verbal (and non-verbal) cues that are lacking from written documents. If done right – they are easy and highly effective.
We use quick async videos in a variety of ways. Sometimes they are from the managers to update their team on initiatives or overall priorities for the week, or sometimes they are from individuals to their managers for quick weekly goal updates, and sometimes they are between teammates to provide quick progress updates or ask questions.
In all scenarios – the videos are rich in content and help enhance teamwork within the organization. And unlike written docs – videos enhance the company culture by adding personalization and a ‘feeling’ of working closely together despite the miles of separation.
But to ensure you don’t swap your Zoom hell for video watching hell – here are 5 tips to do them right.
5 tips for better async video:
1. Use a simple recording app
Back in the day – recording and sharing videos was a huge pain. Often times you’d record on 1 device, transfer the file, encode it then attempt to send a huge file to someone.
All of these offer simple ways to hit 1 button, record and send.
2. Never longer than 3 minutes
If you think opening up your inbox in the morning and seeing 1000 new emails is brutal – try opening up a video and seeing that you’re being asked to watch 20 mins of a boring monologue. Literally – paint drying.
Despite the temptation to go longer – never EVER record these update videos for longer than 3 minutes. If you need more time than that – either breakup the video into multiple topics or simply provide the key points in the video and send additional written information.
Same deal with all the videos you get from your team. 3 mins max and enforce it.
3. Record once
Most people hate hearing & seeing themselves on video. So they continue to re-record the video over and over and over and over and over and over and over and over.
Don’t do that. 1 take only. Ship your MVP (minimally viable product).
Remember that this is an internal video and probably only watched once. So don’t waste a ton of time recording it.
Only exception to this rule is if you violate the 3 min rule. Then take a second take to shorten it.
4. Show your screen & your face
Most recording software has 3 choices – record the screen, record webcam, record both screen and webcam. Pick the ‘both’ option.
If you only record the screen – your audience misses your non-verbal cues and the video lacks personality. If you only record the webcam – your audience lacks valuable visual information. Additionally, your audience ‘fatigues’ at staring at you for the entire 3 min monologue. Since the typical 2 person live conversation averages 2 mins per person per turn, your audience expects to ‘speak’ and the video gets annoying (just like a person who talks too much in person).
When you record the screen as primary (larger) and the webcam as secondary (smaller) – this ends up as the right balance. The video has content to read while listening to you – but still shows your facial gestures and non-verbal cues.
5. Send the link – not the file
Unfortunately, after recording these 3 min videos, they end up as huge files. Sending this file over email is typically rejected by your mail server and is a poor practice.
Cloud to the rescue.
Recording software companies have solved the large file problem by automatically uploading the video to their cloud storage then creating sharable links. Simply send that link to your team. They click on it and watch from any device.
Some recording apps (like Jumpshare and Loom) are native SaaS apps – and automatically display the video in their cloud interface. These work great also. You end up creating a personal YouTube-like channel of your videos and can measure views, length of viewer watch time, etc. And if you no longer want the video available – you can simply unshare it.
Managing remote teams is hard. You have to rethink the way you manage or you end up in Zoom hell. Bringing in asynchronous work is the key – and quick videos are an important tool for you and your team to master.
For additional information on how to record great videos – see these pieces:
You remember it like yesterday. Your company’s revenue had flatlined. Growth had stalled. Things that worked before just stopped. You were desperate.
Geoffrey Moore states that your company fell into ‘The Chasm’. In his iconic 1991 book ‘Crossing the Chasm’, he describes how the ‘smooth’ Technology Adoption Curve is a bit misleading.
The Technology Adoption Curve
All companies & technologies ride the Rogers Technology Adoption curve. The curve describes the adoption of technology across different market segments. Some customers are willing to be on the ‘bleeding edge’ and others will only adopt a proven technology. This Technology Adoption Curve is broken up into 5 market segments.
Innovators – the first to adopt new technologies, they are a small but passionate set of leading-edge folks that love tech advancement.
Early Adopters – the second group is a slightly larger group that is also generally risk-oriented and highly adaptable to new tech. They embrace new products after the Innovators.
Early Majority – the third group is a much larger group that is a bit more careful than the previous 2 groups. They are still willing to adopt new technologies – but only after the Early Adopter and Innovators have proven the technology to be effective.
Late Majority – the fourth group is a conservative and risk-adverse group. They need a bit of convincing before investing in something new.
Laggards – the last group is an extremely frugal, very conservative and technology-averse. These folks still have rotary dial telephones.
Moore states that there is a ‘chasm’ between the Early Adopters and the Early Majority. This is due to the fact that the expectations of the first 2 groups are very different than the last 3.
To effectively ‘Cross the Chasm’ – companies need to ‘pivot’ their product offerings to address the mainstream market. A ‘whole product’ is required for a technology to cross the chasm into the mainstream of the market.
For those companies that do manage to get across the chasm – good days are typically in the cards. The company is now into the ‘Early Majority’ – which is a much larger part of the market. Often times, the company will double or triple in revenue with strong year-on-year growth.
But what happens after that?
When you relook at the Technology Adoption Curve – and zoom at the top of the curve – you notice something interesting. As you climb up the Early Majority, the slope of the curve starts to decline. It then eventually becomes flat!
In business terms – this means the awesome revenue growth that you experienced after crossing the chasm starts to slow. It then completely stalls. This stall comes out of nowhere – since you’ve been experiencing great growth over the past several years. And as time goes on, unfortunately, revenue then starts to shrink.
According to ScaleVP – you can predict this growth decay. After analyzing thousands of SaaS companies – the ‘predictable decay’ of next year’s growth will be 85% of this year’s growth. And for many software companies – growth under 20% per year results in only an 8% chance of surviving a few more years (SaaS sales benchmark)
But I thought this was supposed to be the good ole’ times? You worked hard to cross Geoffrey Moore’s chasm – what’s going on here???
The 2nd Chasm
What’s happening here is actually an important missing part of Moore’s theory.
Believe it or not – there are actually 2 chasms!
Wait – what?
The first chasm gets startups to the mainstream market. For many software companies – revenues go from $0 to $3-5m a year. Getting to millions a year in revenue is incredibly challenging.
But as predicted by the adoption curve and predictable decay – revenue growth gets harder and harder every year. Deals that appear to be ‘just around the corner’ delay further.
The technical debt on your product expands while your next generation product just can’t seem to launch.
Your investor’s IPO dreams are being crushed. Your employees are starting to wonder if this rocket ship isn’t going to pay for their future yacht after all.
You’re now in the 2nd Chasm.
By definition – the 2nd Chasm is a bit further in a company’s life. Revenues have often grown to $8-$10m/year – but have been hovering at that level for several years.
And similar to the first chasm, companies require significant changes to get across this new chasm to regain growth.
But unfortunately – this 2nd Chasm is much much harder to exit than the previous.
Why is it harder to cross the 2nd Chasm?
Companies that fall into the 2nd Chasm have often been in business for 8-10 years. They’ve done a great job getting across the first chasm and addressing a portion of the mainstream market. But crossing the 2nd Chasm is harder than the first due 3 primary reasons:
Company processes are more established and rigid: Think of these companies as middle aged. Not quite as nimble or flexible as they were when they were a few years old. And as a result, the process and procedures that have been in place for a decade are now incredibly hard to change.
Product development has been going on for years: You’d think that the more ‘mature’ product would be better equipped to handle change. But more often than not – since the product was originally built 8-10 years ago – it’s on a legacy tech stack that isn’t easy to change. Many of the original architects are now gone. The product has a ton of technical debt that was never worked off. The product also contains countless small features that have been incrementally added on over the years. All of this makes the product rigid and difficult to modify.
Sources of funding have dried up: Young, sexy, fast growing companies have access to a variety of new funding avenues (VC, angels, etc). Mature companies, unfortunately, don’t have the same options. As a result, any ‘pivot’ has to be self-funded and incremental. This makes the major business & product shifts needed to cross the 2nd Chasm a significant challenge.
And due to all of this, unfortunately, many of these slow growth 2nd Chasm companies end up limping along with shrinking revenue – sometimes for another decade. Eventually, the company is displaced by a fast, hot new competitor on a modern tech stack.
There are thousands of ‘stuck’ software companies in the 2nd Chasm today…
Hot, sexy new competitor problem (oh, and they’re rich)
The good news for 2nd Chasm companies is that your aging customer base is generally satisfied. The product does what it originally intended to do. The company has gone through almost a decade of renewals with your customers and the users are generally content.
The bad news is that a bunch of VCs overfunded a set of new sexy startups in your space. These startups are attacking your customers with fancy words like ‘Artificial Intelligence’ and ‘Machine Learning’. And these VCs didn’t just fund them with a few nickels – they gave them hundreds of millions to come take your happy stagnating customers.
Initially – your problem isn’t your current customers. Your problem is that you stop winning ANY new customers. They are all choosing the hot new fully featured competitor.
You first assume it’s a sales manager problem – so you churn through 2-3 new VPs of Sales with no success.
You then invest in either a marketing agency or a VP of marketing that promises to sprinkle magic fairy dust SEO on your website. They use fancy words like LTV/CAC and guarantee they will bring you new customers if you invest in just a few more Google Ads.
And to pay for all this additional sales & marketing – you cut your product & dev team. You may even completely outsource the engineering to a $2/hr 3rd world body shop.
All of this, of course, fails.
Meanwhile you are now even shorter on money.
And during this time – your ‘loyal’ customers all have one eye open to switching. If the product wasn’t deeply embedded into their business processes and pain to get rid of – they would have switched a while back.
But it’s only a matter of time until you see these loyal customers slowly jump ship. The speed of innovation of the sexy competitor on the new tech stack is exponentially faster than yours. And as soon as the sexy competitor has a full-featured product suite and make it painless for your customers to switch (both technically & via pricing) – you start losing customers.
Your spot product is not longer competitive. You are now in a death spiral.
What can be done for 2nd Chasm companies?
2nd Chasm companies have 3 options:
Accept the decline in business – and shrink until revenue goes to zero
Spend all your money pivoting & overhaul the product/company
Merge with other 2nd Chasm companies to get across together
The first 2 options are the most common.
Option 1 is often chosen by aging entrepreneurs that are basically cruising until retirement. They are fine riding out the end of life of their company. Though not sexy – these companies can slowly decline for another 5-8 years until their final customer cancels. If the entrepreneur manages costs – they can maintain their modest salary. The company becomes a lifestyle business.
Option 2 is much more common since many of the companies at $8-$10m in revenue raised some money along the way. If they are a VC-backed firm – the VC firm is likely nearing the end of the fund life and looking to maximize cash. If it was largely angel funded – the angel has written off that investment or simply looking to get back their original $s. The company spends every last dime trying a hail mary to grow. And when it fails – they shutdown the company (or do a deeply discounted asset sale).
Option 3 is not used as often (but should be). As mentioned, most 2nd Chasm companies are good companies that have achieved partial product market fit. But most of them simply can’t afford to revamp their product to achieve true full product market fit. But by joining forces with 2-3 other firms that service the same customer base – they can scale up to $30m in revenue – and can now afford the right level of product management, engineering and other investments to jump across the chasm.
The merger option also forces each of the companies to rethink their long-standing processes and procedures. Often times, ‘best known methods’ are consolidated to make the combined company stronger. Additionally, the merged company can choose the best talent from within each of the companies to serve as the new leadership.
Their combined offering to the customer base drives up retention and gives a fighting chance to compete against the sexy new competitor.
Not easy – but higher likelihood of success than the first 2…
Platform for 2nd Chasm companies?
At Ionic Partners – we believe there is a great future of many of these 2nd Chasm companies. We are building out a horizontal platform where ‘sets’ of 2nd Chasm companies can be successfully merged together. By reducing the frictions to bring together these companies – we can jump across the 2nd Chasm together and unleash a new wave of entrepreneurship and innovation.
If you are a CEO in the 2nd Chasm – let us setup a virtual coffee to discuss options to merge with other similar firms in your space. There are thousands of other companies in a similar situation – and it’s by joining forces that we are all stronger.
It’s never easy to get out of a chasm – but with a few additional hands & additional scale – we can build bridges together.
When people hear you’re a ‘remote worker’ – they automatically assume you’re working in some elevator-music-filled coffee shop or sitting around the house in your pajamas taking conference calls. They also, unfortunately, think you’re less professional (which obviously isn’t true). But if we want to truly make remote work mainstream – we need to change these perceptions and up our ‘remote work’ game. We need to start with how they ‘see’ you. In a remote worker world – that is via video conferencing. Here are 5 ‘advanced’ tips on how to improve your video conferencing professionalism.
Note – I’m skipping the ‘basic’ video conferencing stuff. Yes – have enough bandwidth to do great HD video. Yes – audio quality matters. Yes – use Zoom or some other provider. No – don’t use your phone as the endpoint. No – don’t have your cats jumping on your lap. There are plenty of blogs out there with basic tips – this blog is for the advanced class.
Advanced Tip 1: Camera orientation
First – it’s important to discuss the end state of what you’re trying to accomplish – a video conference that feels super professional and feels as close to an ‘in-person’ meeting as you can. To do this – the #1 consideration is the orientation of the camera.
I do video calls with 50-300 remote workers a week – and I can tell you that it’s in the single digits on how many of them get the orientation right.
The key to a correct orientation is the camera angle is parallel to your eyes. When the camera is ‘straight on’ – you look like you would if you were meeting in-person. Angles are everything here – and if you’re off by even a little bit – you lose the feeling of in-person.
Take a look at the images below – and you can see the huge difference between the right angle (first image) and wrong angles (all others)…
Advanced Tip 2: Laptop camera
Note the middle ‘wrong’ image above – this is a typical ‘laptop’ camera angle. What often occurs (since the camera on the top of the angled screen) – is that you get the ‘up the nose’ angle. You lose professionalism – and it doesn’t matter who you are – nobody looks good from this angle.
To use your laptop effectively for video conferencing – you have to eliminate the angle of your laptop screen and have it positioned at 90% instead. But for the camera to then not point at your neck – you need to raise it by putting 5-6 books under it. This puts the camera at eye level and brings your orientation back to the right position.
The only problem now is that you’re actually too close to the camera – and you look huge on camera to the other side. So to solve that – you’ll want to move your chair about 2 feet away from the desk or table you put your laptop on. This will feel a bit weird at first – but it’s the right distance away for the correct amount of torso to be seen in the video and for you to look closer to the ‘correct’ image above.
Advanced Tip 3: Background
Another big mistake that I see remote workers make is not paying attention to what’s behind you in the video conference. It’s hard to take you seriously when I see your Luke Skywalker bedsheets in the background.
The ideal background is a blank or wallpapered wall (like you see in my image above) or a professional area such as a neat bookshelf or lamp. You should basically ask yourself – if I were closing a $1M deal – would the person believe I’m in a corporate office? If yes – you’ve got a good background.
There are also apps that have built-in background blur or green screen. I find those largely distracting and don’t often work well (particularly around the edges of people). I wouldn’t recommend using that option to hide your background.
One trick that I’ve used in the past is to ‘make’ a professional background using a photography setup. You can pick up a stand kit on Amazon for under $40 and a variety of different backdrops for only $10-$15. So for ~$50 – you can have a truly professional background – that’s super easy to put up and down – and you’ll fool everyone that you’re not in an office. So if you’re stuck with your Luke sheets and have no other options – get this setup.
Advanced Tip 4: Noise-canceling
There is nothing more annoying than tons of background noise from a participant in a video call. I’ve heard it all – from the noises of being outside to dogs barking to children crying to the flushing of toilets (this happens too often actually). I know there is a mute button – definitely use it – but also do us all a favor by getting a noise-canceling microphone.
Noise-canceling microphones are different than noise-canceling headphones. Noise-canceling headphones are to block out external noise for you (the listener). These are also great for video conferencing (such as my favorite – the Jabra Evolv 75e) – but they don’t do anything for the microphone (for us on the other side of your line).
Noise-canceling microphones, on the other hand, actively cancel out noise for the receiving side. There are many hardware mics that do this – and I highly recommend them. But the latest innovation is software microphone noise canceling. I’ve been super impressed with the Krisp.ai software guys. For $3/m – they have an amazing product that all remote workers should use to eliminate background noise. One of my favorite products of all time.
Advanced Tip 5: HD Option in Settings
I’m not sure how I discovered this option – nor why it’s not ‘on’ by default – but there is a setting in Zoom (and other video providers) to turn HD on. I’m assuming they want to either conserve your bandwidth or reduce their compute requirements – but who in their right mind wants to do SD video? Have you tried going back and watching a non-HD TV? Can’t do it.
The setting in Zoom is under Preferences -> Settings -> Video -> Enable HD. Turn it on…
Okay – enough tips for now – but I’m excited for the day that everyone follows all 5 of these. And if you have more – please let me know and happy to pass them on…
What the heck is ‘remote work’? Is a job that lets you work from home on Fridays ‘remote work’? Is a freelancer building a website for a client as supplemental income ‘remote work’? Is your designer working in Romania doing ‘remote work’? Unfortunately – the answer is ‘yes’ to all of these. How confusing… We need a better categorization of ‘remote jobs’.
Categories of remote jobs
Not all remote jobs are created equal. To break down the generic term of ‘remote job’ – let’s define 3 classes of remote jobs to get on the same page:
‘Work from home’ remote jobs: These jobs are pretending to be ‘remote’ – but really they are perks of an onsite job. This is ‘work from home Fridays’ or ‘satellite offices’ or companies that have a policy that simply lets folks work from home on occasion – but it’s expected that they are in the office for the majority of their working career. Companies tend to be trendy and offer this type of flexibility – but in reality – it’s not truly a part of their culture and secretly the managers hate people that work from home too often (they assume you’re on the golf course). This is not the future of remote work.
Freelancer remote jobs: These are 100% remote jobs – but they are freelancers and other ‘on-demand’ roles. These positions are typically considered part of the ‘gig-economy’ and suffer from the friction of a marketplace. In a marketplace, you typically have to bid on jobs, which – on a global basis – tends to depress the price/hour (yes – that person in Vietnam is willing to work less than you are – and be happy with it). The bid/ask system also creates wild fluctuations in your income, has uncertainty and is project-by-project vs a long-term career. The projects also tend to be tactical and low skill roles. This is also not the future of remote work – but as Upwork has proven – there are a lot of people willing to work nights/weekends to supplement their income.
Authentic remote jobs: This is the future of remote work – 100% remote, full-time / 40 hr/w roles, transparent wage rate, career/growth-oriented, all workers use both remote communication & connection tools, goals/metrics are clear, tasks are able to be completed asynchronously and the company has a remote culture. These are the Rolls Royce of all remote jobs – and what we all aspire to get. These roles will continue to grow exponentially and will have a massive impact on the global economy.
Diving into the details of Authentic remote jobs
The true remote job has no borders. This isn’t ‘can be anywhere – as long as it’s on the East Coast of the US’. Real remote jobs are global. Let me repeat – they are GLOBAL. And they are this way to find the best person in the WORLD for the position – not the best person in your zip code.
Full time, 40 hours/week
Authentic remote jobs are not part-time nor on a bid/ask marketplace system. I’ve never seen a critical position in a company or a key player be ‘transactional’ and only show up part of the time. Additionally – the best in the world already have full-time roles – and they’re looking to put their entire brain/efforts into the next challenge.
Transparent wage rate
Despite the touchy/feely comments people make about their motivations for a job, at the end of the day, money matters – and the best Authentic remote jobs are transparent on what the wage rate is in the job description. According to a recent study by Glassdoor – money is the #1 motivator for 67% of job seekers. Remote or not remote – wage rate matters – so be transparent and include them in the job description.
Though money is a motivator – the best in the world are also looking for intellectual challenges that enhance their careers. This is consistent on remote and non-remote jobs – but even more enhanced when the job seeker now has an infinite number or job opportunities available to them – not just the selection in their zip code.
Use remote communication & connection tools
Many companies have video conferencing and collaboration tools – but ironically – companies that are not ‘remote-first’ fail to use them properly. Managers have to ‘remember’ to post that file on Google drive, the team doesn’t use video in the meetings, everything is synchronous, etc, etc. Authentic Remote jobs are only in companies that treat remote workers as equals.
Success goals & metrics
In a typical office job – if a role isn’t terribly well defined – you can walk around and ask your colleagues and manager to help nudge you in the right direction. In 100% remote jobs – this is much more difficult and the definition of success needs to be more clearly laid out. What are the goals, how is the work itself done, what are the objective metrics, what is the expected calendar are all important to clarify. All Authentic Remote jobs have these characteristics – so success or failure is clear and transparent.
Asynch has also become a bit of a buzzword in the remote world. But the importance of it remains – Authentic Remote jobs have to be able to be done without dependence on synchronization. Unlike everyone huddled in an office – the remote worker needs to be able to complete a majority of the task on their own – in their own time. This doesn’t mean the remote worker doesn’t collaborate with others – it simply means the task itself can be broken down to individual components that the remote worker can complete on their own (with very little dependence on others).
True Authentic Remote jobs are in companies that are ‘remote-first’. This isn’t ‘work from home Fridays’ – it’s a proper understanding of how to build their company structure for remote organization, how to manage and cluster timezones of remote workers, how to understand the power deltas between office workers vs remote workers (ideally there are no physical offices), how to build culture remotely, how to bridge cultural gaps, and how to define roles to be clear/async/measurable.
Examples of Authentic Remote jobs from remote-first companies
Companies such as HotJar offer remote positions and check all the items on our list: they have a remote culture, they are fully remote, employ people from any region as long as the time-zone allows them to be aligned with other team members, offers employment contract for talent in specific countries or contractor agreement for the rest, paid holidays, team collaboration allowance, holiday budget, etc. That is the true remote vision and Authentic Remote jobs.
On the other side – companies like DataDog offer some remote positions, are open to offering 100% remote work, but employees need to live in the US or other areas where the company has offices. It lacks the remote culture, it does not have a fully distributed/remote team. Even if some of the offered jobs are remote, according to the classification above, the lack of remote culture makes those jobs simply flexible jobs, not Authentic Remote jobs.
Going back to the beginning – to get to the end state where the term ‘remote jobs’ evolves to be ‘all jobs’ – we need to be clear on our definitions and what we’re trying to expand. Specifically – employers – develop more Authentic Remote jobs as they are the future of work…