As part of National Small Business Week 2022, B12’s CEO and co-founder Nitesh Banta chatted with Waseem Daher, the CEO and co-founder of Pilot, about his experience running and scaling a business. Pilot powers the back offices for startups and small businesses, helping with bookkeeping, tax prep, and CFO services.

Read on for Waseem’s tips for building processes that help your business scale, how to improve your hiring process, and how to navigate difficult decisions as a business leader.

How did you validate the idea [for your company, Pilot] and build conviction that it was something you wanted to dedicate your next decade-plus to?

That can be very daunting. You're almost never ready to do that in the early stages because any time you're searching for new ideas for a company or product, it's easy to think of all the reasons it won't work.

It's a lot harder to build conviction around the fact that it will work. Until you get that conviction, you're not going to be willing to get started. In this particular case, we were the customer. We knew who we were going to initially sell to and what pain they had because we had those pains and problems. So that's a nice shortcut for validation. You can get pretty far using validation that you can provide, but it's important to sanity-check that other people are like you.

How do you sanity check your idea and find your first customers?

In the very early stages, we talked to a bunch of business owners. We said, “What are you doing for accounting today? How do you like it? What's going well, what's going poorly. If we were to offer this, is it something you'd be interested in?”

We did customer discovery work of trying to get in front of as many potential customers as we could. We wanted to validate the problem and know how much they’d be willing to pay for a solution right now.

Here’s a classic mistake people make in this validation. The question is not whether someone might want this. The question is, have I found a potential customer? Would you specifically be willing to give me your credit card right now to buy this thing? If you can't get to yes, you probably haven't figured out who your customer profile is or you haven't identified something that’s painful enough to make sense.

What’s your advice for working with co-founders?

[Each of Pilot’s co-founders] had hypotheses early on that mapped most naturally to the things we most enjoyed doing or the things we were best at it. There's a lot that you figure out by actually trying to do it together and seeing where you step on each other's toes and what goes pleasantly.

How do you and your co-founders make decisions together, especially tougher decisions?

We have a good intuitive sense of what things need to be escalated. The people who are accountable for the outcomes need to have control over the process that leads to those outcomes. Ideally, you're pushing decision-making down as close to the people who have all the inputs as you can.

In some ways, try to make as few decisions as you can. Because if you can empower your team to make a decision, you'll get better decisions, and they'll be faster.

How did you build up the courage to make your first hire and who was that?

Our first hire was a friend. My experience is that your early hires are probably people you're already connected to. The reason that's the case is that in the early days, you don't have much to show for yourself. You don't have a lot of traction and you can't offer the highest salaries. Your team is betting on the conviction that you will be successful.

If they have some connection to you and they know that you're smart and talented and someone they want to work with, that’s what gives them the conviction. In general, your earliest hires are probably people you're either directly connected to or are a hop or two away.

Now it doesn't have to be that way. If you can hire people outside your network that you're excited about, even better. The challenge in early-stage hiring is it's as much about you finding the person as it is about you convincing the person that they should take a chance on you. The smaller and earlier you are, the harder that is.

What questions should you ask yourself before hiring?

I think there are two questions. There's can you hire, and there’s should you hire. The “can you” is probably dictated by financial constraints. Is it the financially responsible thing to do? And sometimes the answer is no, we can't afford to hire this person, even though we would love to.

For the question of “should you,” ask yourself, will hiring this person let us increase our leverage in some way? Are we going to be able to do more faster? Are we going to be able to do more better? How does the cost of adding someone compare to the benefit of hiring them?

Another consideration when you hire someone is, are they going to have what they need to be successful?

How do you think about hiring full-time versus part-time?

It’s more about in-house versus external. When should you do it yourself versus when should you lean on an external provider? For me, the question is, is this a core area of competency for your business, and is it critical that you kind of have this expertise in-house?

If so, you probably should not lean on a third party for it. You should build the muscle to do it internally. For example, I think that it's very hard to do external product management or external sales because those things require such an intimate understanding of your business and the customer. It's not to say that it's impossible, it's just harder.

The reason to work with someone external is not because it's cheaper or more flexible. The reason to do it is if the outcomes will be better. They're going to have more experience than you do or they'll scale with you better than you will in-house.

How do you stay productive with so much on your plate?

There's the dangerous thing I call fake work, which is you're spending time on this task, and it's useful, but it's actually like priority #25.

By spending time on priority #25, you're procrastinating working on what you should be working on — namely priorities #1 or 2, but you trick yourself because you're like, oh look, it's productive, but that’s not like the highest-leverage thing you should be doing.

It can be so hard to hire. What is your process for finding and hiring candidates?

As much as possible, you want the process to be rigorous and you want the process to select for the actual skills needed to do the job.

Before we hire anyone, we write a job description, which should specify what the role is and what the requirements are. You should be really thoughtful in writing the requirements to make sure that they correspond to the things you actually need.

In addition to writing the job description, you should specify who at your company is going to talk to this candidate and what are they going to ask? What are the focus areas of their interview and how do you make sure that those are non-overlapping? The interview should be testing the job description and should mirror the skills needed to do the job.

Hiring is filled with lots of exciting opportunities, but scaling systems also make a really big difference. How do you give employees systems to leverage?

We think of it as, if something goes wrong, it’s a process problem, not a people problem. The baseline assumption we have about everyone on our team is that they're like smart and capable and they're trying. If they're not, that is a different process failure. That's a failure of your hiring process or performance management process.

When something goes wrong, ask, “What process improvements, tools, and software do we need to make it easier to do it right?” Look for where a ton of time is being spent or where a bunch of errors are being made. Think about the changes that are needed to stop those things from occurring.

With new software or tools, what is the ROI we expect to see from it? Do we expect that the benefits of that investment will outweigh the cost? How do you measure that ROI? We are quite rigorous about time tracking internally and tracking error rates. So we look at it like, this step used to take 20 hours and we think that with the right tool, we can get it down to only 8 hours.

As you've grown pretty rapidly over the last few years, how have you ensured systems scale?

As you make decisions, don’t only think about what works today but also what will be right when we are 10x this size. It could be better to put the final version in place now if you can afford it.

On the other hand, there's a very real concern about premature optimization, which is if you invest all this time and effort in solving for what it might look like in 5 years at the expense of a really awful customer experience now, that doesn't make sense either.

It’s a matter of how obvious is the correct future path. If it is very, very clear what it's going to look like in the future, you should consider doing it now if you can. If there's some ambiguity or uncertainty, it probably doesn't make sense to pre-commit to that path.

Is there a book, podcast, video, or resource that's helped you the most in your entrepreneurial journey?

There's a book called Founding Sales, which is free online. It's basically a technical founders' guide to learning to sell. I thought it was super, super helpful.

If you were starting a new business today, what sectors do you think are most ripe for disruption?

Anything really boring. The reason I say that is things that are “boring” probably aren’t attracting a ton of energy from the average startup founder. So there's a comparatively easier-to-tap opportunity.

What's a lesson you learned from your previous companies that has stayed with you?

Your clients just like want to feel heard and attended to. Sometimes that's as simple as saying, “Hey, I've received your message and I'm looking into it.”

I think there's a natural temptation to be like, let me go get the answer and I’ll reply once I have it. The problem is, that might take a long time. In some ways, I think you're going to get better results with two touches. One is a quick acknowledgment that you received their email and you’re looking into it and will be back in touch at the end of the day.

The second is at the end of the day. And that update may still be “I'm still looking into it,” but it's important because they can't see what you're doing or not doing. This issue is important to them, which is why they reached out in the first place. You can do a lot to hold their hands through it that makes it feel much more white glove.

What lesson do you feel like you're learning today that you'll carry on into future journeys or future growth within Pilot?

The importance of delegation. My natural instinct is to roll up my sleeves and do the thing. That's an instinct that is helpful in the early days, but kind of harmful as you scale because if you get in there and do it, you're taking away an opportunity for your team to learn and you're signaling to the team that you don’t trust them to do it.

How do you stay on top of industry trends and how important has that been for you in terms of scaling?

Two reactions here. One is I basically don't care about industry trends and I say that because I think it is very easy to get distracted by what other people are doing.

The only thing that matters is what your customers care about. If your customers want something, then yeah, you should do, but the thing that motivates you should not be that some other company is doing it. It should be that it unlocked a particular customer need.

What's been your most satisfying entrepreneurial moment so far?

The joy of working with smart, talented people, solving the puzzle together. We're trying to build the machine that no one else has been able to build yet. It really is about the journey of doing it.