Vanessa Kruze knows a thing or two about bootstrapping a startup. So it’s no surprise she helps hundreds of potential unicorns take flight today.
Following a successful first act at one of the Big Four consulting firms, Kruze was hungry for more experience. She enrolled in business school, and to help pay the bills, she found some freelance accounting work on Craigslist for $20 or $25 an hour. Soon, the aspiring MBA was balancing the books for 40 companies, all while maintaining her studies.
She fell in love with startups along the way—and that juggling act sparked the idea for Kruze Consulting. The San Francisco-based firm, which operates globally, advises more than 350 venture-backed startups on all aspects of accounting, finance, tax, and HR, with a particular eye on future mergers and acquisitions. Basically, helping them manage their day-to-day back ends and get their compliance ducks in a row, should that big offer from a larger company come.
While the years-long success story is impressive, Kruze Consulting’s founder and CEO is quick to point out that she learned a lot along the way, advice she now imparts to early-stage companies in her portfolio and beyond.
We recently talked with Kruze to get her take on making the jump from sole proprietor, building company culture in the webcam era, and what the post-COVID business environment might look like.
You’ve had quite an entrepreneurial journey yourself. What drew you to helping startups?
When I first started Kruze Consulting, I was just a sole practitioner. Never imagined it would be this big. What I found is that so many startups out there aren’t just building something new, they’re mission-based companies. They’re biotech companies looking for cures for cancer. They’re environmental companies looking to help forest terrains that have sustained significant damage like fire and flood. We also have companies that are very much on the front lines of COVID in a variety of capacities. I think our team gets a significant amount of satisfaction helping teams that make the world a better place. I know it sounds cheesy, but these companies are doing good things and it’s an honor to serve them. I hope when I’m older and retired I can rattle off some of these companies and my granddaughter can say, “Oh wow!”
What advantage does Kruze Consulting bring?
We really look to have experts here, to ensure that when a question does pop up about revenue recognition—or, you name it—we can get on the phone with the founders and serve as psychiatrist: “We’re gonna get through this, we've seen this hundreds of times, and this might be your first acquisition and it might be scary, but we’re going to keep an eye out for what looks scary.” We do this all the time because we’re such a niche firm, we’re able to offer much more hands-on expertise.
A lot of our clients come to us because they are concerned about compliance. They want to make sure their deal doesn’t fall through because a tax return is missing or they get penalties from not filing X, Y, and Z. We care more, not just about our clients but our team as well. We want to make sure our clients are successful. You never know when a deal is going to go down.
And I understand it’s a family affair?
My husband is actually our COO—we are a mom-and-pop business. He was at a venture-debt firm for about 10 to 15 years. I was running around with my head cut off and I asked him to help and boy did I put him to work that first night.
What are some of the challenges and benefits of working with a spouse?
At first, it was really difficult. Sort of like when you first move in with your significant other. There are those little moments like, “You left the toothbrush on the sink again, what’s wrong with you?!” But in a professional capacity, we found that there was a lot of overlap in our responsibilities. So that caused friction. I think a great point of advice is to make sure those roles and responsibilities and decision making are literally written on paper. Now that the organization is so much larger and we have people at the executive roundtable, it’s much easier to chart a course of action.
What was it like going from a one-person shop—a side hustle, really—to managing more than 70 employees and hundreds of clients? Growth can be intimidating for a lot of business owners. How did you make that leap?
In the early stages of Kruze Consulting—and I don't even know if it was called that at that point—leveraging tech became extremely important. I was so cramped for time between business school and sole proprietorship, I had to rely so much on third-party providers. Their expertise, their efficiency helped me manage 40 clients, albeit hair on fire. That’s really a core value that has been a cornerstone of Kruze Consulting. We’re always looking for technology partners that help us do it bigger and faster.
And you went virtual before it was a necessity for many of us. Lessons learned?
Making the leap from sole proprietor to small business to enterprise, I’ve made so many mistakes, I can’t even tell you. So painful. And when I first started, I was just like, “I’ll hire everyone remotely.” And that worked terribly, because I didn’t have the systems and communications set up yet. After years building out processes, it is the right time to go remote, and I guess my advice for other small business owners is, “You’re gonna get it wrong so many times—and if you get it right the first time, that’s just dumb luck.”
The other thing I struggled with early on was getting the right people on board in the right roles. It sounds cliched but I learned the hard way that someone might want to be in that seat, but it’s not right for them. To have a little more perspective now, what the company needs, what that person needs for both entities to be happy, there needs to be quite a bit of introspection.
How has the pandemic affected your business?
We started to pivot into a remote company about three years ago. We did this because we realized that hiring people in San Francisco or Santa Monica or New York was difficult. We were being outbid or poached by large companies. So we moved to a remote model and it did take quite a bit of transition.
One of the things that I didn't anticipate was the cultural fallout. That’s probably something a lot of other small businesses and startups are feeling right now. Forget about the tech of making it happen—to go from interacting with your coworkers, good or bad, on a daily basis, to being in relative solitude, is difficult. Promoting a culture that encourages water-cooler talk, even if they’ve never met in person, took years. I’m grateful for the move that we made years ago, but I still think it’s a work in progress. My heart really goes out to the 20-somethings out there who are just starting their careers. Because the professional connections you make with your first several jobs, to not having those happy hours with your colleagues, is tough.
Screen fatigue is real. How do you build—and more importantly, maintain—company culture in two dimensions?
There are a couple things that we do throughout the week to ensure connectivity. It starts with our all-hands meeting on Monday morning. What are we doing in terms of our sales pipeline, our tax-return completion rate? I think this has been especially important during COVID. People were concerned about their jobs and we wanted to be transparent. I’ve never seen more engagement in those meetings in March and April. Thankfully, we’re growing at a rate faster than ever before. I think there was more cohesiveness in sharing that data and participating and realizing how everyone comes together to make that work.
We have “Speakers of the Week” who share something about themselves. Around Halloween, it was, “What’s something that scares you?” And that really just helps us get to know each other in deeper ways. On Wednesdays, we do “Wellness Wednesdays.” It might be a yoga class or learning about nutrition.
Hiring virtually, of course, is another new challenge. How do you make the right call on a candidate you’ve never met?
We’ve added about two new team members every month since July. And the trendline showed us that the business was stable and demand was still there. We go through a variety of processes. We use predictive index—a personality test—to see what their aptitudes are. I believe that half a person is going to show up on their resume. The other half is their personality. Are they entrepreneurial? Are they head-down-in-the-books? There really is no right answer, but we’re looking for balance. You’re not going to win a Super Bowl with 12 star quarterbacks.
As we navigate—and ultimately move past COVID—what do you think the business environment will look like?
I am optimistic, but cautious. Our companies have continued to be able to fundraise, they have continued to be able to get acquired at a faster rate than before. Longer term—two, three, four, five years from now—I am worried about the macroeconomic effect of COVID.
I think my advice to startups right now, if you were thinking about raising money a year from now, I would raise it right now. Raise it sooner than you think and more than you need. And have a product that relates to a post-COVID world.
Image Source: Kruze Consulting